Chicov.Hilton Worldwide, Inc.

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIAOct 7, 2014
Case No. CV 14-5750-JFW (SSx) (C.D. Cal. Oct. 7, 2014)

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  • concluding that the court rather than the arbitrator should decide class arbitrability based on a lack of evidence in the contract that the parties agreed to arbitrate the issue

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Case No. CV 14-5750-JFW (SSx)

10-07-2014

Nelson Chico v. Hilton Worldwide, Inc., et al.


CIVIL MINUTES -- GENERAL PRESENT: HONORABLE JOHN F. WALTER, UNITED STATES DISTRICT JUDGE Shannon Reilly
Courtroom Deputy
None Present
Court Reporter
ATTORNEYS PRESENT FOR PLAINTIFFS:
None ATTORNEYS PRESENT FOR DEFENDANTS:
None

PROCEEDINGS (IN CHAMBERS): ORDER GRANTING THE RIM DEFENDANTS' PETITION TO COMPEL ARBITRATION AND STAY ACTION [filed 7/31/2014; Docket No. 12];

ORDER GRANTING DEFENDANT CRESTLINE HOTELS AND RESORTS, LLC.'S PETITION TO COMPEL INDIVIDUAL ARBITRATION, DISMISS CLASS AND REPRESENTATIVE CLAIMS, AND STAY ACTION PENDING ARBITRATION [filed 8/5/2014; Docket No. 15]

On July 31, 2014, Defendants RIM Hospitality, LLC ("RIM"), Hilton Worldwide, Inc. ("Hilton"), Doubletree, LLC ("Doubletree"), and UBS Realty Investors, LLC ("UBS") (collectively, "RIM Defendants") filed a Petition to Compel Arbitration and Stay Action [Docket No. 12]. On August 25, 2014, Plaintiff Nelson Chico ("Plaintiff") filed his Opposition. On August 29, 2014, the RIM Defendants filed a Reply.

On August 5, 2014, Defendant Crestline Hotels and Resorts, LLC ("Crestline") filed a Petition to Compel Individual Arbitration, Dismiss Class and Representative Claims, and Stay Action Pending Arbitration [Docket No. 15]. On August 25, 2014, Plaintiff filed his Opposition and Defendant 3D Investments, LLC filed its Partial Opposition. On August 29, 2014, Crestline filed a Reply.

Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the Court found these matters appropriate for submission on the papers without oral argument. The matters were, therefore, removed from the Court's September 22, 2014 hearing calendar and the parties were given advance notice. After considering the moving, opposing, and reply papers, and the arguments therein, the Court rules as follows: I. FACTUAL AND PROCEDURAL BACKGROUND

To the extent that the Court has relied on evidence to which the parties have objected, the Court has considered and overruled those objections. As to the remaining objections, the Court finds that it is unnecessary to rule on those objections because the disputed evidence was not relied on by the Court.

A. Plaintiff's Employment with Crestline

Crestline is a hotel management company that operates hotels in California and in several other states. From November 30, 2007 to October 5, 2011, Crestline managed and operated the Kyoto Grand Hotel in downtown Los Angeles ("Kyoto Grand"). In November 2007, Crestline hired Plaintiff for the position of Steward in the Food and Beverage Department at the Kyoto Grand. Plaintiff's employment with Crestline ended when Crestline ceased managing the Kyoto Grand on October 5, 2011.

On or about November 15, 2007, Plaintiff signed a one-page document entitled "APPLICANT'S STATEMENT & AGREEMENT," which contained an arbitration agreement with Crestline (the "Crestline Arbitration Agreement"). The Crestline Arbitration Agreement provides in relevant part:

I further agree and acknowledge that the Company and I will utilize binding arbitration to resolve all disputes that may arise out of the employment context. Both the Company and I agree that any claim, dispute, and/or controversy that either I may have against the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) or the Company may have against me, arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration act (Cal. Code Civ. Proc. sec. 1280 et seq. . . .). Included within the scope of this Agreement are all disputes, whether based in tort, contract, statute . . ., equitable law, or otherwise . . . . Awards shall include the arbitrator's written reasoned opinion. I understand and agree to this binding arbitration provision, and both I and the Company give up our right to trial by jury of any claim I or the Company may have against each other.
. . . .
IF YOU HAVE ANY QUESTIONS REGARDING THIS STATEMENT, PLEASE ASK A COMPANY REPRESENTATIVE BEFORE SIGNING. I HEREBY ACKNOWLEDGE THAT I HAVE READ THE ABOVE STATEMENT AND UNDERSTAND THE SAME. DO NOT SIGN UNTIL YOU HAVE READ THE ABOVE STATEMENT & AGREEMENT.

Declaration of Deanne Johnson-Anderson [Docket No. 15-3] at ¶ 8, Exhibit A.

Plaintiff was asked to sign the Crestline Arbitration Agreement, along with a "stack" of other documents, before he commenced his employment with Crestline. Plaintiff believed that he was required to sign the documents, including the Crestline Arbitration Agreement, as a condition of his employment. The documents were in English and were not translated into Spanish, even though Spanish is Plaintiff's primary language. According to Plaintiff, he could not read or understand the documents that he was asked to sign, and he was not informed that one of the documents contained an arbitration agreement. At the time he signed the Crestline Arbitration Agreement, Plaintiff claims that he did not even understand the meaning of the word "arbitration." He also claims that no one informed him that he could ask questions about any of the documents, and he was not provided an opportunity to review the documents, consult with an attorney about his rights, or take the documents home so that they could be translated into Spanish.

Crestline disputes that Plaintiff was unable to read English. See Declaration of Lim Cho Chan [Docket No. 35-4] at ¶ 4 ("In my capacity as Director of Finance, I also witnessed Mr. Chico's ability to read, write and sign documents in English. I recall meeting with Mr. Chico in connection with his onboarding process during the transition of the Kyoto Grand's management to Crestline. I met with Mr. Chico in the late evening at the beginning of his shift to discuss his employee benefits paperwork with him. Mr. Chico read, reviewed and signed those documents in my presence. Mr Chico never told me that he could not read or understand these documents, or that he needed a Spanish version."); Supplemental Declaration of Deanne Johnson-Anderson [Docket No. 35-2] at ¶ 3, Exhibit A (attaching Plaintiff's employment application, which Plaintiff personally filled out in English).

B. Plaintiff's Employment with RIM

After Crestline ceased managing the Kyoto Grand in October 2011, the hotel changed its name and became the Doubletree by Hilton Hotel Los Angeles Downtown ("Hotel"), which was managed, and continues to be managed, by RIM. RIM employed Plaintiff in the Hotel's Food and Beverage Department from approximately October 2011 until October 2012, when RIM terminated Plaintiff's employment.

On October 5, 2011, at the outset of his employment with RIM, Plaintiff signed another arbitration agreement (the "RIM Arbitration Agreement"), which was written in Spanish. The RIM Arbitration Agreement, as translated, provides in relevant part:


Agreement for Binding Arbitration


In consideration of my employment with the company, its promise to arbitrate all employment-related disputes, and my receipt of the compensation and other benefits paid to me by the company, at present and in the future, I agree that any and all controversies, claims, or disputes with anyone (including the company and any employee, officer, director, shareholder or benefit plan of the company in their capacity as such or otherwise) arising out of, relating to, or resulting from my employment with the company, or the termination of my employment with the company, shall be subject to binding arbitration under the rules set forth in the California Code Of Civil Procedure section 1280 through 1294.2 . . . .Disputes which I

agree to arbitrate, and thereby agree to waive any right to a trial by jury, include any statutory claims under state or federal law . . . . I further understand that this agreement to arbitrate also applies to any disputes that the company may have with me and that the company is also giving up its right to a trial by jury for all claims covered by this agreement.

. . . . I understand that the company will pay for any fees charged by the arbitrator or AAA and that I shall not be required to pay any fees in excess of those I would have had to pay if my disputes with the company had been filed in court. . . . I agree that the decision of the arbitrator shall be in writing.

. . . .

I acknowledge and agree that I am executing this agreement voluntarily and without any duress or undue influence by the Company or anyone else. I further acknowledge and agree that I have carefully read this agreement and that I have asked any questions needed for me to understand the terms, consequences and binding effect of this agreement and fully understand it, including that I am waiving my right to a jury trial. Finally, I agree that I have been provided an opportunity to seek the advice of an attorney of my choice before signing this agreement.

Declaration of Dale Wielgus [Docket No. 12-3] at ¶ 4, Exhibit B.

Again, Plaintiff was asked to sign the RIM Arbitration Agreement, along with a "stack" of other documents, before he commenced his employment with RIM. Although the RIM Arbitration Agreement was in Spanish, Plaintiff contends that he did not understand it because the language was confusing. Plaintiff claims that, at the time, he did still not understand what the word "arbitration" meant, and that, despite the clear language in the RIM Arbitration Agreement, "[n]o one explained that . . . [h]e would supposedly be giving up [his] right to a jury trial for any disputes with Rim." Declaration of Nelson Chico [Docket No. 23-2] at ¶ 6. He again believed that he was required to sign the RIM Arbitration Agreement as a condition of his employment, and claims that no one informed him that he could ask questions. He also states that he was not provided an opportunity to review the documents, consult with an attorney about his rights, or take the documents home. Finally, Plaintiff claims that he does not "recall" ever receiving the first page of the two-page RIM Arbitration Agreement.

C. This Action

On April 1, 2014, Plaintiff, on behalf of himself and all others similarly situated, filed a putative Class Action Complaint against RIM, Hilton, Doubletree, UBS, Crestline and 3D Investments, LLC, alleging the following claims for relief: (1) failure to provide required meal periods; (2) failure to provide required rest periods; (3) failure to provide overtime wages; (4) failure to pay minimum wage; (5) failure to pay all wages due to discharged and quitting employees; (6) failure to maintain required records; (7) failure to furnish accurate itemized statements; (8) failure to indemnify employees for necessary expenditures incurred in discharge of duties; and (9) unfair unlawful business practices. Plaintiff also seeks penalties for alleged California Labor Code violations under California's Private Attorney General Act ("PAGA").

Although Plaintiff was employed by Crestline and thereafter RIM, Plaintiff alleges in conclusory fashion that all defendants (including Defendants Hilton, Doubletree, UBS, and 3D Investments, LLC) were the "alter egos, divisions, affiliates, integrated enterprises, joint employers, subsidiaries, parents, principals, related entities, co-conspirators, authorized agents, partners, joint venturers, and/or guarantors, actual or ostensible, of each other." Complaint at ¶ 13.

Pursuant to the Federal Arbitration Act, Crestline and the RIM Defendants move this Court for an order: (1) compelling Plaintiff to individually arbitrate his claims pursuant to the Crestline and RIM Arbitration Agreements; (2) dismissing Plaintiff's class and representative claims; and (3) staying this action pending the arbitration of Plaintiff's individual claims. Defendant 3D Investments, LLC has not filed a petition to compel arbitration, and objects to any order compelling it to arbitration.

Plaintiff contends that Crestline and the RIM Defendants failed to comply with Local Rule 73 and this Court's Standing Order prior to filing their petitions to compel arbitration. This Court maintains a firm policy of reducing unnecessary motion practice and requires strict compliance with Local Rule 7-3. However, in light of Crestline's and the RIM Defendants' representations that they complied with Local Rule 7-3, and given that any further meet-and-confer efforts would clearly be futile, the Court will rule on the merits of Crestline's and the RIM Defendants' petitions to compel arbitration. --------

II. LEGAL STANDARD

In 1925, Congress enacted the Federal Arbitration Act ("FAA") in response to widespread judicial hostility to arbitration. See American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304, 2308-09 (2013); AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011). Section 2 of the FAA provides in relevant part:

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2.

This provision reflects both a "liberal federal policy favoring arbitration" and the "fundamental principle that arbitration is a matter of contract." Concepcion, 131 S. Ct. at 1745 (quotations and citations omitted). "In line with these principles, courts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms." Id. (internal citations omitted).

However, the FAA includes a saving clause, which permits courts to declare an arbitration agreement unenforceable "upon any grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "This saving clause permits agreements to arbitrate to be invalidated by 'generally applicable contract defenses, such as fraud, duress, or unconscionability,' but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." Concepcion, 131 S. Ct. 1740, 1746 (2011) (quoting Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687 (1996)).

"A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration" may petition the district court for an order compelling arbitration "in the manner provided for in such an agreement." 9 U.S.C. § 4. The Court, "upon being satisfied that the making of the agreement for arbitration . . . is not in issue . . . shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. By its terms, the FAA "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985)). Thus, the court's role under the FAA is limited to determining: (1) whether the arbitration agreement is valid and enforceable; and (2) whether the claims asserted are within the purview of the arbitration agreement. See Howard Elec. & Mech. Co., Inc. v. Frank Brisco Co., Inc., 754 F.2d 847, 849 (9th Cir.1985); Bischoff v. Direct TV, Inc., 180 F. Supp. 2d 1097, 1102 (C.D. Cal. 2002).

III. DISCUSSION

Plaintiff does not dispute that he signed the Crestline and RIM Arbitration Agreements, or that his individual claims are within the purview of those agreements. Rather, Plaintiff argues that the Crestline and RIM Arbitration Agreements are invalid and unenforceable because: (1) Plaintiff did not understand, and thus did not "assent to", the arbitration agreements; (2) Crestline and RIM did not execute the arbitration agreements; and (3) the arbitration agreements are unconscionable. In addition, Plaintiff claims that the arbitration agreements are unenforceable as to his wage claims pursuant to California Labor Code § 229 and as to his representative PAGA claims pursuant to the California Supreme Court's recent decision in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014).

The Court concludes that the Crestline and RIM Arbitration Agreements are valid and enforceable, and that, pursuant to those agreements, Plaintiff must individually arbitrate his claims.

A. Plaintiff Assented to the Terms of the Arbitration Agreements.

Plaintiff contends that both the Crestline and RIM Arbitration Agreements are invalid because there was no "meeting of the minds" or mutual assent. Specifically, Plaintiff contends that he did not assent to the Crestline Arbitration Agreement because he could not read English, and thus could not understand the meaning of the documents that he was asked to sign. Plaintiff contends that he did not assent to the RIM Arbitration Agreement because, even though it was in Spanish, the language was confusing and he did not understand the meaning of the word "arbitration". Plaintiff also does not "recall" receiving the first page of the RIM Arbitration Agreement.

As an initial matter, many of Plaintiff's claims are simply not credible and contradicted by other evidence. For example, Plaintiff claims that he did not know what the word "arbitration" meant. However, the RIM Arbitration Agreement clearly explained in Plaintiff's primary language that, by signing the agreement, Plaintiff was waiving his right to trial by jury. The RIM Arbitration Agreement also provided, just above Plaintiff's signature, "I further acknowledge and agree that I have carefully read this agreement and that I have asked any questions needed for me to understand the terms, consequences and binding effect of this agreement and fully understand it, including that I am waiving my right to a jury trial." Declaration of Dale Wielgus [Docket No. 12-3] at ¶ 4, Exhibits A and B. Moreover, although Plaintiff does not "recall" receiving the first page of the RIM Arbitration Agreement, he seemingly contradicts this claim elsewhere in his declaration. See Declaration of Nelson Chico at ¶ 4 ("When I began my employment with Rim, I was given a stack of documents to sign. I did not understand one of the documents with the heading "El Acuerdo para Atar Arbitraje"). In addition, the second page of the document, which bears Plaintiff's signature, begins mid-sentence, and it is implausible that Plaintiff would not have alerted RIM to the missing page had he not received it. Furthermore, Crestline disputes that Plaintiff was unable to read English. See Declaration of Lim Cho Chan [Docket No. 35-4] at ¶ 4 ("In my capacity as Director of Finance, I also witnessed Mr. Chico's ability to read, write and sign documents in English. I recall meeting with Mr. Chico in connection with his onboarding process during the transition of the Kyoto Grand's management to Crestline. I met with Mr. Chico in the late evening at the beginning of his shift to discuss his employee benefits paperwork with him. Mr. Chico read, reviewed and signed those documents in my presence. Mr Chico never told me that he could not read or understand these documents, or that he needed a Spanish version."); Supplemental Declaration of Deanne Johnson-Anderson [Docket No. 35-2] at ¶ 3, Exhibit A (attaching Plaintiff's employment application, which Plaintiff personally filled out in English).

In any event, even if Plaintiff could not understand or even read the Crestline or RIM Arbitration Agreements, the Court concludes that he assented to their terms. "In determining the validity of an agreement to arbitrate, federal courts 'should apply ordinary state-law principles that govern the formation of contracts.'" Ferguson v. Countrywide Credit Indus., Inc., 298 F.3d 778, 782 (9th Cir. 2002) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). "There is no contract until there is mutual consent of the parties. . . . Mutual consent necessary to the formation of a contract 'is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.'" Deleon v. Verizon Wireless, LLC, 207 Cal. App. 4th 800, 813 (2012) (citations omitted). "Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it. If he cannot read, he should have it read or explained to him." Randas v. YMCA of Metropolitan Los Angeles, 17 Cal. App. 4th 158, 163 (1993) (quoting 1 Witkin, Summary of Cal. Law (9th ed. 1987), § 120, p. 145). Indeed, "[i]t is well established, in the absence of fraud, overreaching or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it." Id. (quotations and citations omitted). "Although mutual consent is a question of fact, whether certain or undisputed state of facts establishes a contract is a question of law for the court." Deleon, 207 Cal. App. 4th at 813.

By signing the documents, Plaintiff manifested his assent to the Crestline and RIM Arbitration Agreements. Accordingly, in the absence of any alleged fraud, overreaching, or excusable neglect, Plaintiff is deemed to have assented to all of the terms of these agreements whether or not he actually understood them or whether or not he could even read them. Plaintiff has not alleged any fraud, overreaching, or excusable neglect. Indeed, in his Declarations [Docket Nos. 23-2 and 24-2], Plantiff does not claim that he advised Crestline or RIM that he could not understand or read the documents, that he needed more time to review the documents, or that Crestline or RIM misrepresented the nature or contents of the agreement. Under these circumstances, the Crestline and RIM Arbitration Agreements are valid. See, e.g., Moliina v. Scandinavian Designs, Inc., 2014 WL 1615177, at *3-4 (N.D. Cal. Apr. 21, 2014) (holding that arbitration agreement was not void for lack of mutual assent even if plaintiff could read very little English, because his signature manifested his assent and there were no facts to suggest that his employer engaged in fraud); Randas, 17 Cal. App. 4th at 164 (holding that contract written in English was valid, even though the plaintiff, who was literate in Greek but not English, could not read it); see also Soto v. State Industrial Products, Inc., 642 F.3d 67, 78 (1st Cir. 2011) (quotations and citations omitted) ("[I]t is a general and well established principle of contract law that one who is ignorant of the language in which a document is written, or who is illiterate, may be bound to a contract by negligently failing to learn its contents."); Morales v. Sun Constructors, Inc., 541 F.3d 218, 222 (3rd Cir. 2008) ("In the absence of fraud, the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English-language agreement the offeree executes is enforceable.").

Accordingly, the Court concludes that Plaintiff assented to the terms of the Crestline and RIM Arbitration Agreements.

B. The Arbitration Agreements Are Valid and Enforceable Even Without Crestline's and RIM's Signatures.

Plaintiff also argues that the Crestline and RIM Arbitration Agreements are invalid or unenforceable because they were not executed by Crestline and RIM. This argument lacks merit and borders on the frivolous. "While the FAA authorizes the court to enforce only written agreements to arbitration (9 U.S.C. § 3), it does not require the written agreements to be signed." Ambler v. BT Americas Inc., 964 F. Supp. 2d 1169, 1174 (N.D. Cal. 2013); see also Rojas v. Lewis Brisbois Bisgaard & Smith LLP, 2014 WL 3612568, at *4 (D. Nev. July 18, 2014) ("An arbitration agreement bearing only an employee's signature is valid and enforceable even if it is unsigned by the employer."). "The manifestation of assent to a contractual provision may be 'wholly or partly by written or spoken words or by other acts or by failure to act.'" Merced County Sheriff's Employees Ass'n v. County of Merced, 188 Cal. App. 3d 662, 670 (1987) (quoting Restatement (Second) of Contracts § 19 (1981)). In this case, Crestline and RIM manifested their assent by presenting the agreements to Plaintiff for execution, accepting the signed copies of the agreements, and then employing Plaintiff.

C. The Crestline and RIM Arbitration Agreements Are Not Unconscionable.

In addition, Plaintiff argues that both the Crestline and RIM Arbitration Agreements are unenforceable because they are unconscionable. "Like other contracts, arbitration agreements can be invalidated for fraud, duress, or unconscionability." Chavarria v. Ralphs Grocery Co., 733 F.3d 916, 921 (9th Cir. 2013). "Unconscionability under California law 'has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.'" Kilgore v. KeyBank Nat'l Ass'n, 673 F.3d 947, 963 (9th Cir. 2012) (quoting Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 99 (2000)). California courts apply a "sliding scale" analysis in determining unconscionability: "the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable and vice versa." Pokorny v. Quixtar, Inc., 601 F.3d 987, 996 (9th Cir. 2010) (quotations and citations omitted). "Thus, although both procedural and substantive unconscionability must be present for the contract to be declared unenforceable, they need not be present to the same degree." Id.

The party opposing arbitration has the burden of proving that the arbitration agreement is unconscionable. See Engalla v. Permanente Medical Group, 15 Cal. 4th 951, 972 (1997) ("[A] party opposing the petition [to arbitrate] bears the burden of proving by a preponderance of the evidence any fact necessary to its defense."); Pinnacle Museum Tower Ass'n v. Pinnacle Market Development (US), LLC, 55 Cal. 4th 223, 236 (2012) ("[T]he party opposing arbitration bears the burden of proving any defense such as unconscionability.").

1. Procedural Unconscionability

"In assessing procedural unconscionability, the court, under California law, focuses on the factors of surprise and oppression in the contracting process, including whether the contract was one drafted by the stronger party and whether the weaker party had an opportunity to negotiate." Pokorny v. Quixtar, 601 F.3d 987, 996 (9th Cir. 2010). Oppression arises "from an inequality of bargaining power [that] results in no real negotiation and an absence of meaningful choice." Circuit City Stores, Inc. v. Mantor, 335 F.3d 1101, 1106 (9th Cir. 2003) (quoting Stirlen v. Supercuts, Inc., 51 Cal. App. 4th 1519, 1532 (1997)). Surprise "involves the extent to which the contract clearly discloses its terms as well as the reasonable expectations of the weaker party," Chavarria, 733 F.3d at 922, and "involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms." Stirlen, 51 Cal. App. 4th at 1532.

Plaintiff contends that the Crestline and RIM Arbitration Agreements are procedurally unconscionable because, in relevant part: (1) they were "contracts of adhesion," presented to him as a condition of his employment and on a take-it-or-leave-it basis; (2) they were presented in a stack of employment-related documents, and he had no opportunity to ask questions, consult with an attorney about his rights, or take the documents home; and (3) Crestline and RIM failed to attach a copy of the relevant arbitration rules to the agreements and failed to explain how he could view or obtain them. Plaintiff also contends that the Crestline Arbitration Agreement is procedurally unconscionable because it was in English, and he was not given an opportunity to obtain a translation of the agreement.

Plaintiff has demonstrated at least a minimal degree of procedural unconscionability. "California law treats contracts of adhesion, or at least terms over which a party of lesser bargaining power had no opportunity to negotiate, as procedurally unconscionable to at least some degree." Bridge Fund Capital Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1004 (9th Cir. 2010). Indeed, when an arbitration agreement is imposed upon employees as a condition of their employment and it is presented to the employee on a "take-it-or-leave it basis," the agreement is at least somewhat procedurally unconscionable. See Chavarria v. Ralphs Grocery Company, 733 F.3d 916, 932 (9th Cir. 2013); Laughlin v. VMware, Inc., 2012 WL 298230, at *5 (N.D. Cal. Feb. 1, 2012). Although both RIM and Crestline dispute that they presented Plaintiff with the arbitration agreements on a take-it-or-leave it basis, Plaintiff has presented evidence to the contrary. Declaration of Nelson Chico [Docket No. 23-2] at ¶ 5 ("I was told to fill out all the paperwork in order to continue working for Rim."); Declaration of Nelson Chico [Docket No. 24-2] at ¶ 5 ("The Human Resources assistant, Ingrid Gonzalez, told me that if I did not sign, I would be out of the company."). In absence of an evidentiary hearing, the Court must consider the evidence in the light most favorable to the Plaintiff and thus the Court will assume that the arbitration agreements were contracts of adhesion and to some degree procedurally unconscionable

In addition, the Court agrees that if Crestline and RIM did not give Plaintiff an opportunity to ask questions, consult with an attorney, take the arbitration agreements home, or obtain a Spanish translation of the Crestline Arbitration Agreement, it would further support Plaintiff's claim of procedural unconscionability. However, in this case, Plaintiff does not claim that he ever attempted to ask questions, or that he requested an opportunity to consult with an attorney, take the arbitration agreements home, or obtain a Spanish translation, or that Crestline or RIM actually denied these requests. Accordingly, the Court concludes that Crestline's and RIM's alleged conduct, if true, would add only a minimal degree of procedural unconscionability.

Furthermore, although some courts have held that the failure to attach the relevant arbitration rules to the arbitration agreement adds "a bit" to procedural unconscionability, that failure by itself is insufficient to sustain a finding of procedural unconscionability. See Lane v. Francis Capital Management LLC, 224 Cal. App. 4th 676, 690 (2014); Zullo v. Superior Court, 197 Cal. App. 4th 477, 485-86 (2011). The Court is not required to find procedural unconscionability based on a failure to attach a copy of the arbitration rules unless it would result in surprise to the party opposing arbitration. See Lane, 224 Cal. App. 4th at 690-92. In this case, the relevant rules are readily available on the internet, and Plaintiff does not point to any particular rule that unfairly surprised him. The Court concludes that the failure to attach the relevant arbitration rules adds little, if any, support for Plaintiff's claim of procedural unconscionability.

Moreover, the Court finds that other relevant indicia of procedural unconscionability are absent. For example, the terms of the Crestline or RIM Arbitration Agreements were not hidden in a "prolix printed form." The Crestline Arbitration Agreement was located within a one-page document identified as "APPLICANT'S STATEMENT & AGREEMENT," consisting of only nine clearly-written paragraphs. Notably, the paragraph governing arbitration was the longest of the paragraphs within that one-page document. The RIM Arbitration Agreement consisted of only two-pages, and its heading, El Acuerdo para Atar Arbitraje , which was in bold face and underlined, clearly notified Plaintiff that it was an arbitration agreement. Moreover, the RIM Arbitration Agreement was in Plaintiff's primary language, Spanish.

However, because the Court concludes that Plaintiff has demonstrated at least a minimal degree of procedural unconscionability, the Court will consider the issue of substantive unconscionability.

2. Substantive Unconscionability

Although Plaintiff has demonstrated some level or degree of procedural unconscionability, he must also demonstrate substantive unconscionability to avoid arbitration - "both [must] be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability." Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 114 (2000). Because Plaintiff has failed to demonstrate any substantive unconscionability, the Crestline and RIM Arbitration Agreements are enforceable.

Plaintiff disingenuously contends that the Crestline and RIM Arbitration Agreements are substantively unconscionable because they are not bilateral and they do not provide for judicial review. However, neither of these contentions are true. The Crestline Agreement expressly binds both Plaintiff and Crestline: "I further agree and acknowledge that the Company and I will utilize binding arbitration to resolve all disputes that may arise out of the employment context. Both the Company and I agree that any claim, dispute, and/or controversy that either I may have against the Company . . . . or the Company may have against me . . . shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act." Declaration of Deanne Johnson-Anderson [Docket No. 15-3] at ¶ 8, Exhibit A. Likewise, the RIM Arbitration Agreement expressly binds both Plaintiff and RIM: "I further understand that this agreement to arbitrate also applies to any disputes that the company may have with me and that the company is also giving up its right to a trial by jury for all claims covered by this agreement." Declaration of Dale Wielgus [Docket No. 12-3] at ¶ 4, Exhibit B.

Moreover, contrary to Plaintiff's contention, it is clear that both the Crestline and RIM Arbitration Agreements provide for judicial review of the arbitration award. The Crestline Arbitration Agreement provides that the claims shall be submitted to and determined by "binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. Sec 1280 et seq. . . .)". Declaration of Deanne Johnson-Anderson [Docket No. 15-3] at ¶ 8, Exhibit A. Likewise, the RIM Arbitration Agreement provides that the claims shall be subject to binding arbitration "under the rules set forth in the California Code of Civil Procedure section 1280 through 1294.2." Declaration of Dale Wielgus [Docket No. 12-3] at ¶ 4, Exhibit B. Both the FAA and the California Arbitration Act, California Code of Civil Procedure §§ 1280, et seq., provide for judicial review. See 9 U.S.C. §§ 9-12; Cal. Civ. Proc. Code §§ 1286-1286.8. To the extent Plaintiff claims that the arbitration agreements were required to expressly provide for judicial review, the Court rejects that claim as frivolous.

Despite the existence of a minimal degree of procedural unconscionability, Plaintiff has failed to demonstrate any substantive unconscionability. Accordingly, the Court concludes that the Crestline and RIM Arbitration Agreements are not unconscionable.

D. The FAA Preempts California Labor Code § 229.

Plaintiff argues that, even if the Crestline and RIM Arbitration Agreements are valid and not unconscionable, he cannot be compelled to arbitrate his wage claims pursuant to California Labor Code § 229. California Labor Code § 229 provides in relevant part: "Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate." However, as Plaintiff recognizes, in Perry v. Thomas, 482 U.S. 483 (1987), the Supreme Court held that the FAA preempts California Labor Code § 229. In order to escape the clear holding in Perry, Plaintiff argues, in conclusory fashion, that the FAA does not apply because Crestline and the RIM Defendants have failed to demonstrate that his employment involved interstate commerce.

However, both Crestline and the RIM Defendants have demonstrated that the FAA is applicable. The FAA applies to the arbitration provisions of any contract "evidencing a transaction involving commerce." 9 U.S.C. § 2. The United States Supreme Court has broadly construed this phrase, and has held that the word "involving" is the "functional equivalent of 'affecting'" and that it "signals an intent to exercise Congress' commerce power to the full." Allied-Bruce Terminix Co., Inc. v. Dobson, 513 U.S. 265, 273-74 (1995). It is undisputed that Crestline and RIM both operate and manage hotels in California and other states, and that the hotel at which Plaintiff worked routinely provided services and accommodations to, and generated revenue from, guests and visitors throughout the United States and abroad. It is also undisputed that Crestline and RIM routinely purchased, supplied, and engaged in commercial transactions with vendors, suppliers and service providers from states other than California on behalf of the hotel. As an employee, Plaintiff's duties thus supported commercial transactions with out-of-state guests, vendors, and suppliers and affected the hotel's multi-state and international business and operations. See Declaration of Deanne Johnson-Anderson [Docket No. 15-3] at ¶¶ 4, 7; Declaration of Dale Wielgus [Docket No. 12-3] at ¶¶ 3, 6. Based on these facts, the Court concludes that Plaintiff's employment involved interstate commerce.

Accordingly, the FAA applies and preempts California Labor Code § 229.

E. Plaintiff Shall Individually Arbitrate His Claims.

Plaintiff argues that, even if the Court compels arbitration, the Court should not compel Plaintiff to individually arbitrate his claims. Instead, Plaintiff argues that the Court should allow the arbitrator to decide whether class arbitration is available under the Crestline and RIM Arbitration Agreements.

The Supreme Court "has not yet decided whether the availability of class arbitration" is for a court or for an arbitrator to resolve. See Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064, 2068 n.2 (2013); see also Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp., 559 U.S. 662, 680 (2010) (noting that "only the plurality" in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003) decided that an arbitrator, not a court, should determine whether a contract permits class arbitration). The Ninth Circuit has also not yet decided this question. The only two circuits to squarely address the question have concluded that the availability of class arbitration is a "question of arbitrabilty" to be decided by the Court "unless the parties clearly and unmistakably provide otherwise." See Opalinksi v. Robert Half Int'l Inc., 761 F.3d 326, 332-35 (3rd Cir. 2014); Reed Elsevier, Inc. v. Crockett, 734 F.3d 594, 597-99 (6th Cir. 2013). The Court agrees with, and adopts, the reasoning of those two cases. Accordingly, because the parties did not clearly and unmistakably provide otherwise, the Court, rather than the arbitrator, must decide whether the Crestline or RIM Arbitration Agreements authorize class arbitration.

The Court concludes, and Plaintiff does not contest, that the Crestline and RIM Arbtiration Agreements do not authorize class arbitration. As the Supreme Court held in Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010), "a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." Id. at 684. "An implicit agreement to authorize class-action arbitration . . . is not a term that the arbitrator may infer solely from the fact of the parties' agreement to arbitrate. This is so because class-action arbitration changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to an arbitrator." Id. at 685.

In this case, there is no contractual or other basis for concluding that the parties agreed to class-wide arbitration. Indeed, the Crestline and RIM Arbitration Agreements repeatedly refer to Plaintiff in the singular and make no reference to employee groups, putative class members, other employees, or other employees' claims or disputes. Accordingly, the Court concludes that the Crestline and RIM Arbitration Agreements do not authorize class arbitration, and that Plaintiff shall individually arbitrate his claims.

F. The FAA Preempts California's Rule Against PAGA Waivers.

Similarly, the Crestline and RIM Arbitration Agreements do not authorize arbitration of Plaintiff's representative PAGA claims. Because arbitration of representative PAGA claims would fundamentally change the nature of arbitration, it cannot be presumed that the parties consented to arbitration of representative PAGA claims simply because they agreed to submit their disputes to an arbitrator. Cf. Stolt-Nielsen, 559 U.S. at 685; see Parvateneni v. E*Trade Financial Corp., 967 F.Supp.2d 1298,1302-1203 (N.D. Cal. 2013). Plaintiff does not argue otherwise, but rather contends that the arbitration agreements are unenforceable as to his representative PAGA claims pursuant to the California Supreme Court's recent decision in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014). In Iskanian, the California Supreme Court held that an employee's right to bring a representative PAGA claim is not waivable and that any purported waiver in an arbitration agreement is contrary to public policy and unenforceable as a matter of state law. Id. at 383. The California Supreme Court also concluded that "the rule against PAGA waivers does not frustrate the FAA"s objectives because . . . the FAA aims to ensure an efficient forum for the resolution of private disputes, whereas a PAGA action is a dispute between an employer and the state Labor and Workforce Development Agency." Id. at 384.

However, numerous federal courts have determined that the FAA preempts California's rule prohibiting the waiver of representative PAGA claims. See, e.g., Fardig v. Hobby Lobby Stores Inc., 2014 WL 2810025, at *6-7 (C.D. Cal. June 13, 2014); Asfaw v. Lowe's HIW, Inc., 2014 WL 1928612, at *9-10 (C.D. Cal. May 13, 2014); Appelbaum v. AutoNation Inc., 2014 WL 12396585, at * 11 (C.D. Cal. Apr. 8, 2014); Parvateneni v. E*Trade Financial Corp., 967 F. Supp. 2d 1298, 1305 (N.D. Cal. 2013); Velazquez v. Sears, Roebuck and Co., 2013 WL 4525581, at *7 (S.D. Cal. Aug. 26, 2013); Andrade v. P.F. Chang's China Bistro, Inc., 2013 WL 5472589, at *1-11 (S.D. Cal. Aug. 9, 2013); Miguel v. JPMorgan Chase Bank, N.A., 2013 WL 452418, at *9-10 (C.D. Cal. Feb. 5, 2013); Quevedo v. Macy's, Inc., 798 F. Supp. 2d 1122, 1140-42 (C.D. Cal. 2011); Grabowski v. Robinson, 817 F. Supp. 2d 1159, 1181 (S.D. Cal. 2011). In fact, the only federal court to have considered this issue since the California Supreme Court's decision in Iskanian held: "Even in light of Iskanian, the Court continues to hold that the rule making PAGA claim waivers unenforceable is preempted by the FAA. There is nothing in Iskanian that persuades the Court otherwise, and the Court is not bound by the California Supreme Court's understanding of federal law." Fardig v. Hobby Lobby Stores Inc., 2014 WL 4782618, at *4 (C.D. Cal. Aug. 11, 2014).

The Court agrees and adopts the reasoning of these cases, and concludes that the FAA preempts California's rule against PAGA waivers. The "principal purpose" of the FAA is to "ensure that private arbitration agreements are enforced according to their terms." AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1749 (2011) (quotations and citations omitted). "[P]arties may agree to limit the issues subject to arbitration, to arbitrate according to specific rules, and to limit with whom a party will arbitrate its disputes." Id. (internal citations omitted). In AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the Supreme Court held that the FAA prohibited States from conditioning the enforceability of certain arbitration agreements on the availability of classwide arbitration procedures. In accordance with Concepcion, the Court concludes that the FAA likewise preempts California's rule against PAGA waivers.

Accordingly, the Court will enforce the Crestline and RIM Arbitration Agreements according to their terms pursuant to the FAA. Plaintiff shall arbitrate his PAGA claims on an individual basis.

G. Requiring Plaintiff to Arbitrate His Claims on an Individual Basis Does not Violate the NLRA.

Relying on the National Labor Relations Board's decision in In re D.R. Horton, Inc., 357 NLRB No. 184 (2012), Plaintiff contends that requiring him to arbitrate his claims on an individual basis violates sections 7 and 8 of the National Labor Relations Act ("NLRA"), which protect concerted employee activities. However, "the two courts of appeals, and the overwhelming majority of the district courts, to have considered the issue have determined that they should not defer to the NLRB's decision in D.R. Horton on the ground that it conflicts with the explicit pronouncements of the Supreme Court concerning the policies undergirding the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16." Richards v. Ernst & Young, LLP, 744 F.3d 1072, 1075 (9th Cir. 2013) (citing cases). Indeed, "every district court in this circuit to consider [D.R.Horton] has declined to follow it." Miguel v. JPMorgan Chase Bank, N.A., 2013 WL 452418, at *9 (C.D. Cal. Feb. 5, 2014). Recently, the California Supreme Court considered this issue, and also concluded "in light of the FAA's liberal federal policy favoring arbitration, that sections 7 and 8 of the NLRA do not represent a contrary congressional command overriding the FAA's mandate." Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348, 373 (2014) (quotations and citations omitted).

The Court agrees with the majority of courts that have considered the issue, and concludes that the NLRA does not prohibit the individual arbitration of Plaintiff's claims.

H. The Arbitration Agreements May Be Enforced By Third Party Defendants

Although Defendants Hilton, Doubletree, and UBS are not parties to the Crestline or RIM Arbitration Agreements, "[t]he United States Supreme Court has held that a litigant who is not a party to an arbitration agreement may invoke arbitration under the FAA if the relevant state contract law allows the litigant to enforce the agreement." Murphy v. DirecTV, Inc., 724 F.3d 1218, 1229 (9th Cir. 2013). In California, a nonsignatory may enforce an arbitration agreement when (1) the signatory alleges "substantially interdependent and concerted misconduct" by the nonsignatory and a signatory, and (2) the alleged misconduct is "founded in or intimately connected with the obligations of the underlying agreement." Goldman v. KPMG LLP, 173 Cal. App. 4th 209, 217-218 (2009).

Plaintiff alleges that all defendants (including Defendants Hilton, Doubletree, UBS, and 3D Investments, LLC) were the "alter egos, divisions, affiliates, integrated enterprises, joint employers, subsidiaries, parents, principals, related entities, co-conspirators, authorized agents, partners, joint venturers, and/or guarantors, actual or ostensible, of each other." Complaint at ¶ 13. Plaintiff also alleges that he was "employed by DEFENDANTS under employment agreements that were partly written, partly oral, or partly implied" and asserts the same wage-and-hour claims against all Defendants for their alleged "systemic course of illegal payroll practices and policies." Complaint at ¶ 17,17, 18-64.

Based on the foregoing, the Court concludes (and the Plaintiff does not contest) that Defendants Hilton, Doubletree, and UBS may enforce the arbitration agreements against Plaintiff. Because 3D Investments, LLC does not seek to enforce the arbitration agreements against Plaintiff, the Court will not compel 3D Investments, LLC to arbitrate Plaintiff's claims.

I. This Action Shall Be Stayed Pending the Outcome of the Arbitration.

Pursuant to the FAA, the Court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3. Because Plaintiff's claims against 3D Investments, LLC arise out of the same transaction or series of related transactions as his claims against Crestline and the RIM Defendants and there is a possibility of conflicting rulings on common issues of law and fact, the Court STAYS this action as to all parties pending the outcome of arbitration.

IV. CONCLUSION

For the foregoing reasons, the RIM Defendants' Petition to Compel Arbitration and Stay Action is GRANTED. Crestline's Petition to Compel Individual Arbitration, Dismiss Class and Representative Claims, and Stay Action Pending Arbitration is GRANTED.

Plaintiff is hereby COMPELLED to individually arbitrate his claims against Crestline and the RIM Defendants, and this action is STAYED pending the outcome of arbitration. Notwithstanding the stay, the parties shall file a joint report regarding the status of the arbitration every 120 days, with the first status report due on or before February 5, 2015.

IT IS SO ORDERED.


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