Robert Correa v. Soho House and Co. ( 2024 )

O 1 2 3 4 5 6 7 8 United States District Court 9 Central District of California 10 11 ROBERT CORREA et al., Case № 2:24-cv-04354-ODW (MAAx) 12 Plaintiffs, ORDER DENYING PLAINTIFFS’ 13 v. MOTION TO REMAND AND 14 SOHO HOUSE AND CO. et al., DEFENDANTS’ MOTION TO 15 COMPEL ARBITRATION [9] [10] Defendants. 16 17 I. INTRODUCTION 18 Plaintiffs Robert Correa and Kevin Ricardo Vasquez filed this putative class 19 action in the Superior Court of the State of California against Defendants Soho House 20 & Company (“SHCO”), Soho House, LLC, Soho House West Hollywood, LLC, and 21 LA 1000 Santa Fe, LLC (collectively, “Soho House Clubs” or “Defendants”). (Notice 22 Removal (“NOR”) Ex. B (“First Am. Compl.” or “FAC”), ECF No. 1-2.) Soho House 23 Clubs removed the case on the grounds that the Court has jurisdiction pursuant to the 24 Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). (NOR ¶ 1, ECF No. 1.) 25 26 27 28 1 Plaintiffs move to remand. (Mem. ISO Mot. Remand (“Mot. Remand”), ECF 2 No. 9-1.) Soho House Clubs, in turn, move to compel arbitration. (Mem. ISO Mot. 3 Compel (“Mot. Compel”), ECF No. 10-1.) The Court DENIES both motions.1 4 II. BACKGROUND 5 Soho House Clubs own and operate high-end dining and drinking 6 establishments in Los Angeles County. (FAC ¶¶ 1–5.) Correa and Vasquez are 7 former non-exempt employees of Soho House Clubs. (Id. ¶ 7.) Correa and Vasquez 8 allege that, during their employment, they “regularly worked shifts that lasted more 9 than four hours without any rest periods.” (Id. ¶ 8.) Soho House Clubs failed to pay 10 premium wages on days when Correa and Vasquez were entitled to, but unable to 11 take, rest periods. (Id. ¶ 9.) As a result of the missed premium wages, Soho House 12 Clubs provided Correa and Vasquez with inaccurate wage statements. (Id. ¶ 10.) 13 Soho House Clubs also failed to pay Correa and Vasquez the amount due at the end of 14 their employment and failed to reimburse them for “work-related expenses.” (Id. 15 ¶¶ 11–12.) 16 On March 5, 2024, Correa and Vasquez filed a class action complaint against 17 Soho House Clubs in state court. (NOR ¶ 3.) Correa and Vasquez assert causes of 18 action against Soho House Clubs for (1) failure to provide rest periods; (2) failure to 19 provide accurate wage statements; (3) failure to reimburse work-related expenses; 20 (4) California’s Business & Professions Code violations; and (5) Private Attorneys 21 General Act. (“PAGA”) violations. (FAC ¶¶ 21–42.) 22 Soho House Clubs removed the case to federal court under CAFA. (NOR ¶ 1.) 23 Correa and Vasquez now move to remand and Soho House Clubs move to compel 24 arbitration. (See Mot. Remand; Mot. Compel.) Both Motions are fully briefed. 25 (Opp’n Mot. Remand, ECF No. 11; Reply ISO Mot. Remand, ECF No. 13; Opp’n 26 Mot. Compel, ECF No. 14; Reply ISO Mot. Compel (“Reply Compel”), ECF No. 15.) 27 28 1 Having carefully considered the papers filed in connection with the Motions, the Court deemed the matters appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 III. MOTION TO REMAND 2 As the Court must have subject-matter jurisdiction to consider the Motion to 3 Compel Arbitration, the Court first considers Plaintiffs’ Motion to Remand. 4 A. Legal Standard 5 A lawsuit filed in state court may be removed to federal court if the federal 6 court has original jurisdiction. 28 U.S.C. § 1441(a). CAFA provides federal courts 7 with jurisdiction over a purported class action if all the following requirements are 8 met: (1) the putative class has at least 100 members; (2) at least one putative class 9 member is a citizen of a state different from any defendant; and (3) the amount in 10 controversy exceeds $5,000,000. Id. §§ 1332(d)(2), (5). 11 A defendant seeking to remove a case must file in the district court a notice of 12 removal “containing a short and plain statement of the grounds for removal.” 13 28 U.S.C. § 1446(a). A short and plain statement “need not contain evidentiary 14 submissions.” Dart Cherokee Operating Co., LLC v. Owens, 574 U.S. 81, 84 (2014). 15 The removing defendant bears the burden of establishing federal jurisdiction. Abrego 16 Abrego v. Dow Chem. Co., 443 F.3d 676, 682–83 (9th Cir. 2006). Unlike cases 17 removed under diversity jurisdiction, “no antiremoval presumption attends cases 18 invoking CAFA.” Dart Cherokee, 574 U.S. at 89. 19 If removal is challenged, the defendant’s evidentiary burden to establish CAFA 20 jurisdiction depends on whether a plaintiff mounts a “facial” or “factual” attack on the 21 jurisdictional allegations found in the notice of removal. See Harris v. KM Indus., 22 Inc., 980 F.3d 694, 699 (9th Cir. 2020). 23 “A ‘facial’ attack accepts the truth of the defendant’s allegations but asserts that 24 they are insufficient on their face to invoke federal jurisdiction.” Id. (quoting Leite v. 25 Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014)) (cleaned up). When a plaintiff 26 mounts a facial attack, the burden falls on the defendant “to plausibly show that it is 27 reasonably possible” that the CAFA jurisdictional requirements are satisfied. See 28 Anderson v. Starbucks Corp., 556 F. Supp. 3d 1132, 1136 (N.D. Cal. 2020) (quoting 1 Greene v. Harley-Davidson, Inc., 965 F.3d 767, 772 (9th Cir. 2020)); see also Leite, 2 749 F.3d at 1121 (“The district court resolves a facial attack as it would a motion to 3 dismiss under Rule 12(b)(6) . . . .”). 4 “A factual attack, by contrast, ‘contests the truth of the [defendant’s] factual 5 allegations, usually by introducing evidence outside the pleadings.’” Salter v. Quality 6 Carriers, Inc., 974 F.3d 959, 964 (9th Cir. 2020) (quoting Leite, 749 F.3d at 1121). 7 When a plaintiff mounts a factual attack, a defendant must show “by a preponderance 8 of the evidence” that the CAFA jurisdictional requirements are satisfied. Id. at 963 9 (quoting Dart Cherokee, 574 U.S. at 88). 10 B. Discussion 11 Plaintiffs argue removal is improper because Soho House Clubs offer no 12 evidence to support their allegations found in the notice of removal. (Mot Remand. 3– 13 6.) Plaintiffs further assert that even if removal is proper, the home state exception 14 applies. (Id. at 6–7.) Soho House Clubs disagree and argue removal is proper because 15 the Court has subject matter jurisdiction under 28 U.S.C. § 1332 and the home state 16 exception is inapplicable. (Opp’n Mot. Remand 4–8.) 17 1. Type of Jurisdictional Challenge 18 Plaintiffs’ entire argument against CAFA jurisdiction, as established in their 19 Motion to Remand, can be distilled into three statements: (1) Soho House Clubs offer 20 “no evidence that the class size is ‘at least 757’”; (2) Soho House Clubs offer “no 21 evidence of its citizenship”; and (3) Soho House Clubs offer “no evidence of the 22 $5,000,000” jurisdictional threshold. (See Mot. Remand 3–6.) Nowhere do Plaintiffs 23 “assert that [Soho House Clubs] misinterpreted the thrust of [their] complaint,” or 24 “offer any declaration or evidence that challenge[s] the factual bases of [Soho House 25 Clubs’] plausible allegations.” Harris, 980 F.3d at 699 (quoting Salter, 974 F.3d 26 at 964). Declaring that Soho House Clubs’ alleged class size is a “seemingly inflated 27 number,” (Mot. Remand 4), is not a “reasoned argument as to why any assumptions 28 on which [Soho House Clubs’ jurisdictional allegations] are based are not supported 1 by evidence.” Harris, 980 F.3d at 700. Accordingly, Plaintiffs’ “no evidence” 2 argument amounts to a facial attack on Soho House Clubs’ jurisdictional allegations in 3 the notice of removal. See e.g. Tapia v. Nat’l Dentex Labs LLC, No. 2:23-cv-09933- 4 JFW (PVCx), 2024 WL 262862, at *2 (C.D. Cal. Jan. 24, 2024) (finding plaintiff’s 5 argument that “[d]efendant did not submit sufficient proof supporting its calculations 6 of the amount in controversy . . . constitutes a facial attack.”). 7 As Plaintiffs mount a facial attack, the Court applies the lower “plausibility” 8 standard to Soho House Clubs’ allegations—accepting as true well-pleaded 9 allegations and drawing all reasonable inferences in Soho House Clubs’ favor. See 10 Salter, 974 F.3d at 964; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 11 2. Class Size 12 Soho House Clubs must first plausibly allege that the putative class contains at 13 least 100 members. Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1195 (9th Cir. 14 2015) (citing 28 U.S.C. § 1332(d)). 15 In their Complaint, Plaintiffs define a putative class consisting of “any and all 16 persons who have been employed by Defendants as non-exempt employees in 17 California at any time within the four-year statute of limitations period.” (FAC ¶ 13.) 18 Plaintiffs notably assert that “there are approximately 100 Class members.” (Id. ¶ 16.) 19 Based on these allegations, Soho House Clubs allege that “from March 5, 2020, 20 through the present . . . Defendants employed at least 757 individuals in California as 21 non-exempt employees.” (NOR ¶ 21.) The Court finds Soho House Clubs plausibly 22 allege there are at least 100 class members based on reasonable inferences drawn from 23 Plaintiffs’ Complaint and factual content from Soho House Clubs’ own records. (See 24 Decl. Terence Heflin-Connolly ISO Opp’n Mot. Remand (“Heflin-Connolly Opp’n 25 Decl.”) ¶ 8, ECF No. 11-1.) 26 3. Minimal Diversity 27 “If any one class member has different state citizenship than any one defendant, 28 minimal diversity is satisfied under CAFA.” Brown v. Janus of Santa Cruz, No. 21- 1 cv-00094-BLF, 2021 WL 3413349, at *4 (N.D. Cal. Aug. 5, 2021) (citing 28 U.S.C. 2 § 1332(d)(2)(A)). Absent a factual challenge, “a defendant’s allegation of citizenship 3 may be based solely on information and belief.” Ehrman v. Cox Commc’ns, Inc., 4 932 F.3d 1223, 1227 (9th Cir. 2019). 5 Soho House Clubs allege, based on information and belief, that Plaintiffs “are 6 residents and citizens of California.” (NOR ¶¶ 14–15.) Defendant SHCO is a citizen 7 of Delaware and New York based on its place of incorporation and principal place of 8 business. (Id ¶ 16.) These allegations plausibly establish minimal diversity because 9 Soho House Clubs plead “factual content that allows the court to draw the reasonable 10 inference” that Plaintiffs hold California citizenship and at least one Defendant holds 11 non-California citizenship. Iqbal, 556 U.S at 678; see also Ehrman, 932 F.3d 12 at 1226–27 (finding defendants’ citizenship allegations sufficient to overcome a facial 13 challenge when based on information and belief). 14 4. Amount in Controversy 15 “The amount in controversy is simply an estimate of the total amount in 16 dispute, not a prospective assessment of [a] defendant’s liability.” Lewis v. Verizon 17 Commc’ns, Inc., 627 F.3d 395, 400 (9th Cir. 2010). When analyzing a defendant’s 18 allegations, the court “need not perform detailed mathematical calculations to 19 determine whether the defendant has established the jurisdictional amount.” 20 Anderson, 556 F. Supp. 3d at 1136. A defendant “may rely on reasonable 21 assumptions to prove that it has met the statutory threshold and on a chain of 22 reasoning that includes assumptions based on reasonable grounds.” Id. at 1136–37 23 (internal quotations and citation omitted). “Reasonable grounds include the 24 allegations in the complaint, as well as extrinsic evidence proffered by the defendant.” 25 Id. at 1137. 26 As discussed above, Soho House Clubs must make a plausible showing that 27 their potential liability exceeds $5 million. Greene, 965 F.3d at 772. When, as in this 28 instance, Plaintiffs do not allege an amount in controversy in their Complaint, the 1 Court looks to the allegations in the notice of removal. See Lewis, 627 F.3d at 397 2 (holding that the party seeking removal bears the burden of showing that the amount 3 in controversy exceeds $5,000,000 when the complaint does not contain any specific 4 amount of damages). In their Notice of Removal, Soho House Clubs allege that the 5 amount in controversy falls between $6,268,263 and $7,018,893, exceeding the 6 $5,000,000 jurisdictional threshold. (NOR ¶¶ 34–35.) The Court analyzes each 7 damage calculation in turn. 8 a. Rest Breaks 9 Soho House Clubs estimate that potential liability for failing to provide rest 10 breaks falls between $1,501,260 and $2,101,764, “calculated as: $20.45 applicable 11 hourly rate × 293,645 shifts × [25% - 35% violation rate].” (Id. ¶ 26.) 12 This calculation is based on reasonable inferences using hourly rates and shift 13 amounts provided by Defendant SHCO’s Regional People Director—The Americas. 14 (See Heflin-Connolly Opp’n Decl. ¶¶ 8–9.) The violation rate range is also reasonable 15 based on Plaintiffs’ allegation in their Complaint that “non-exempt employees of 16 Defendants in California regularly worked shifts that lasted more than four hours 17 without any rest periods.” (FAC ¶ 8.) Allegations that violations were “regularly 18 occurring” support a pattern and practice of such violations. Garcia v. William 19 Scotsman, Inc., No. 2:24-cv-02977-MWF (SPx), 2024 WL 4289895, at *5 (C.D. Cal. 20 Sep. 25, 2024). Courts have generally found a violation rate of 25% to 35%, like the 21 one applied here, reasonable for pattern and practice allegations. See id.; Bryant v. 22 NCR Corp., 284 F. Supp. 3d 1147, 1151 (S.D. Cal. 2018) (accepting a 30% violation 23 rate for a rest period claim based on pattern and practice allegations); Kincaid v. Educ. 24 Credit Mgmt. Corp., No 2:21-cv-00863-TLN-JDP, 2022 WL 597158, at *4 (E.D. Cal. 25 Feb. 28, 2022) (finding a 20% to 60% violation rate for meal period and rest period 26 violations reasonable based on pattern and practice allegations). 27 28 1 Accordingly, because Soho House Clubs’ factual allegations are plausible and 2 the violation rate range is appropriate, Court finds Soho House Clubs’ rest break 3 calculation to be reasonable. 4 b. Waiting Time 5 Soho House Clubs estimate that their potential liability for waiting time 6 penalties is $2,275,000, “calculated as: 474 separated employees × 8 hours × 30 days 7 × $20 average hourly rate of pay.” (NOR ¶ 29.) 8 The Court does not take issue with Soho House Clubs’ factual allegations used 9 in their calculation: (1) 474 individuals were separated from employment during the 10 applicable three-year period and (2) the average hourly rate of pay was $20. (NOR 11 ¶ 29; Heflin-Connolly Opp’n Decl. ¶ 10.) Soho House Clubs’ use of “30 days” in 12 their calculation, (NOR ¶¶ 28–29), is also reasonably supported by Plaintiffs’ 13 allegation that they are still owed premium wages for the missed rest periods. (FAC 14 ¶ 24); see also Ramos v. Schenker, Inc., No. 5:18-cv-01551-JLS (KK), at *2, 15 2018 WL 5779978 (C.D. Cal. Nov. 1, 2018) (“Plaintiff's allegations of unpaid wages 16 are implicit allegations of maximum damages for waiting time penalties.”) 17 The Court, however, finds that Soho House Clubs’ reliance on “8 hours” in 18 their calculation is not reasonable. (NOR ¶ 29.) Plaintiffs allege Soho House Clubs 19 regularly failed to provide rest periods for shifts between 3.5 to 6.0 hours and 6.0 to 20 10.0 hours. (FAC ¶ 22.). The Court is unconvinced that the use of 8 hours is 21 reasonable in light of Plaintiffs’ allegations. See LaCross v. Knight Transp. Inc., 22 755 F.3d 1200, 1202 (9th Cir. 2015) (“[O]ur first source of reference in determining 23 the amount in controversy [is] plaintiff’s complaint.”). Staying within Soho House 24 Clubs’ “conservative” estimates, (NOR ¶¶ 24, 26, 33–34), the Court finds that the use 25 of 6 hours is more reasonable, as this length is found within both alleged ranges. (See 26 FAC ¶ 22.) 27 28 1 Accordingly, the Court finds that $1,706,4002 is a more appropriate 2 representation of the potential liability for waiting time penalties. 3 c. Wage Statement 4 Soho House Clubs estimate that their potential liability for wage statement 5 penalties is $1,238,350, “calculated as: [$50 penalty for each initial violation × 6 337 pay periods] + [$100 penalty for each subsequent violation × 17,780 pay periods] 7 and capped at $4,000 per individual.” (NOR ¶ 30.) 8 This calculation is reasonably supported by Soho House Clubs’ personnel data 9 showing that they (1) employed at least 337 individuals in California during the 10 applicable one-year period and (2) the 337 individuals worked approximately 11 18,117 pay periods. (NOR ¶ 30; Heflin-Connolly Opp’n Decl. ¶ 11). The penalty 12 amounts are also appropriate because an employee may recover up to $50 for the 13 violation in the initial pay period and $100 for each violation in subsequent pay 14 periods, not to exceed $4,000 in aggregate. See California Lab. Code § 226(e)(1) 15 Accordingly, because Soho House Clubs’ factual allegations are plausible and 16 appropriately reflect the amounts permitted under California Labor Code 17 section 226(e)(1), the Court finds the wage statement penalties calculation is 18 reasonable. 19 d. Total Amount in Controversy 20 After adjusting Soho House Clubs’ calculation for waiting time penalties, the 21 total amount in controversy is $5,046,514.3 Accordingly, as Soho House Clubs 22 sufficiently plead the amount in controversy exceeds the $5,000,000 jurisdictional 23 threshold, the Court need not and declines to reach Soho Houses Clubs’ proposed 24 attorneys’ fees calculations. 25 26 27 2 Calculated as 474 separated employees × 6 hours × 30 days × $20 average hourly rate of pay. 28 3 Calculation applying a 35% violation rate: ($2,101,764 + $1,706,400 + $1,238,350) = $5,046,514. This calculation does not include attorneys’ fees. 1 5. CAFA Jurisdiction Conclusion 2 Soho House Clubs plausibly show that (1) the putative class contains at least 3 100 members; (2) at least one plaintiff is diverse in citizenship from any one 4 defendant (i.e., minimal diversity); and (3) the aggregate amount in controversy is 5 greater than $5,000,000. Thus, the Court finds that Soho House Clubs sufficiently 6 plead the CAFA jurisdictional requirements. 7 6. Home State Exception 8 “Once CAFA jurisdiction [is] established,” as it is here, “the burden falls on the 9 party seeking remand . . . to show that an exception to CAFA jurisdiction applies.” 10 Adams v. W. Marine Prods., Inc., 958 F.3d 1216, 1220 (9th Cir. 2020) (internal 11 citation omitted). Here, Plaintiffs assert that the home state exception may apply to 12 CAFA jurisdiction. (Mot. 6–7.) 13 “The home state exception accords two bases for remand: one mandatory and 14 the other within the district court’s discretion.” Adams, 958 F.3d at 1220. However, 15 under both the mandatory and discretionary bases, the primary defendants must be 16 citizens of the state where the action was originally filed for the exception to apply. 17 See id. Accordingly, the Court need only determine, under a preponderance of the 18 evidence standard, whether the primary defendants in this case are not citizens of 19 California. See id. at 1221. 20 a. Judicial Notice 21 Plaintiffs request the opportunity to conduct discovery to meet their evidentiary 22 burden to establish the citizenship of the primary defendants. (Mot. 7; see also 23 Reply 4–5.) Soho House Clubs, in turn, ask the Court to take judicial notice of 24 various facts and exhibits proffered in Danielle C. Deras v. Soho House LLC et al., 25 No. 2:24-cv-03428-AB (SSCx) (C.D. Cal. filed Apr. 25, 2024): (1) one Minute Order 26 regarding various motions (Ex. A); (2) the Declaration of Philip Spee (Ex. B); and 27 (3) an Opposition Memorandum (Ex. C). (Defs.’ Req. Judicial Notice (“DRJN”), 28 ECF No. 12.) In particular, the Declaration of Philip Spee, who is Defendant SHCO’s 1 Regional Director of Operations–West Coast, contains information about the primary 2 defendants’ citizenship. (DRJN Ex. B (“Spee Decl.”), ECF No. 12-1.) 3 A court may take judicial notice of an adjudicative fact if it is “not subject to 4 reasonable dispute.” Fed. R. Evid. 201(b). “A fact is not subject to reasonable dispute 5 if it is generally known, or can be accurately and readily determined from sources 6 whose accuracy cannot reasonably be questioned.” Khoja v. Orexigen Therapeutics, 7 Inc., 899 F.3d 988, 999 (9th Cir. 2018) (internal quotation marks omitted). “A court 8 must also consider—and identify—which fact or facts it is noticing from such a 9 transcript.” Id. “Just because the document itself is susceptible to judicial notice does 10 not mean that every assertion of fact within that document is judicially noticeable for 11 its truth.” Id. Further, “[a] court may not take judicial notice of a fact that is subject 12 to ‘reasonable dispute’ simply because it is contained within a pleading that has been 13 filed as a public record or is asserted in another document which otherwise is properly 14 the subject of judicial notice.” Lauter v. Anoufrieva, 642 F. Supp. 2d 1060, 1077 15 (C.D. Cal. 2009). 16 Here, Plaintiffs do not directly dispute the facts found in the Spee Declaration. 17 Rather, it appears that Plaintiffs hope to prove Spee wrong after they conduct 18 discovery. The Court is skeptical that Plaintiffs can raise a reasonable dispute as to 19 the primary defendants’ citizenship because (1) it is unreasonable to believe that Spee 20 fabricated information about the sole owner of two limited liability companies in a 21 declaration that is signed under penalty of perjury and (2) Plaintiffs provide no facts to 22 indicate that Spee’s statements can be reasonably questioned. Accordingly, to the 23 extent the Court relies on the submitted document, the Court GRANTS Soho House 24 Clubs’ RJN and takes judicial notice of Exhibit B—the Declaration of Philip Spee.4 25 (Spee Decl.) 26 27 4 The Court DENIES Defendants’ RJN as to Exhibit A and Exhibit C because it does not “affect the 28 outcome of this [M]otion”. See Migliori v. Boeing N. Am., Inc., 97 F. Supp. 2d 1001, 1004 n.1 (C.D. Cal. 2000); (DRJN Ex A, C.) 1 b. Home State Exception Analysis 2 Soho House Clubs must establish, under a preponderance of evidence, that the 3 primary defendants are not citizens of California. See Adams, 958 F.3d at 1221. 4 Here, Plaintiffs assert that the primary defendants are Soho House West Hollywood, 5 LLC and LA 1000 Santa Fe, LLC (“Primary Defendants”). (Mot. 7.) As limited 6 liability companies, the citizenship of Primary Defendants’ owners or members 7 determines their citizenship. See Johnson v. Columbia Props. Anchorage, LP, 8 437 F.3d 894, 899 (9th Cir. 2006) (“[A]n LLC is a citizen of every state of which its 9 owners/members are citizens.”). 10 Primary Defendants are both limited liability companies with Soho House, LLC 11 as the sole owner. (Spee Decl. ¶ 3; NOR ¶ 20.) Soho House, LLC’s sole member is 12 Soho House U.S. Corporation. (Spee Decl. ¶ 3.) Soho House U.S. is incorporated in 13 the State of Delaware with its principal place of business in New York. (Id.) 14 Accordingly, Soho House U.S. Corporation is a citizen of Delaware and New York. 15 See 28 U.S.C § 1332(c). Following the chain of sole ownership established above, 16 Primary Defendants are Delaware and New York citizens for purposes of diversity. 17 Accordingly, Plaintiffs’ assertion that the home state exception may apply fails 18 because Primary Defendants hold non-California citizenship. 19 Because Soho House Clubs have sufficiently shown that Primary Defendants 20 are not California citizens by a preponderance of the evidence, the home state 21 exception does not apply. 22 IV. MOTION TO COMPEL 23 The Court, having determined it has subject matter jurisdiction, turns to Soho 24 House Clubs’ Motion to Compel Arbitration. 25 26 27 28 1 A. Legal Standard 2 In deciding whether to compel arbitration, the Federal Arbitration Act (“FAA”)5 3 generally limits a court’s inquiry to “two ‘gateway’ issues: (1) whether there is an 4 agreement to arbitrate between the parties; and (2) whether the agreement covers the 5 dispute.” Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) (quoting 6 Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). “A defendant may 7 meet its ‘initial burden to show an agreement to arbitrate’ merely ‘by attaching a copy 8 of the arbitration agreement purportedly bearing the opposing party’s signature’ to the 9 motion to compel arbitration.” Medina v. Circle K Stores, Inc., No. 5:22-cv-00557- 10 JGB (DTBx), 2024 WL 1601246, at * 4 (C.D. Cal. Jan. 2, 2024). 11 B. Discussion 12 Soho House Clubs fail at the outset by providing the Court with incomplete 13 copies of the arbitration agreement. Soho House Clubs submit two reproductions of 14 the Dispute Resolution Agreement (“DRA”). (Decl. Terence Heflin-Connolly ISO 15 Mot. Compel (“Heflin-Connolly Mot. Decl.”) Ex. A (“Correa DRA”), ECF No. 10-4; 16 Decl. Terence Heflin-Connolly ISO Reply Compel (“Heflin-Connolly Reply Decl.”) 17 Ex. F (“Vasquez DRA”), ECF No. 15-2.) Each reproduction appears to be a series of 18 webpage screenshots or prints, cobbled together to create the twenty-page DRA. 19 Consequently, each page reflects sentences that are cut-off at the top and bottom of 20 the page, and web interface menus that block material portions of the contractual 21 language. (See generally Correa DRA; Vasquez DRA.) The hyperlink to the digital 22 copy of the DRA is either incomplete or invalid. (See generally Correa DRA (invalid 23 hyperlink in footer); Vasquez DRA (invalid hyperlink in footer); Heflin-Connolly 24 Mot. Decl. Ex. C, ECF No. 10-4 (incomplete hyperlink); Heflin-Connolly Reply Decl. 25 Ex. G, ECF No. 15-2 (invalid hyperlink).) As such, Soho House Clubs do not provide 26 27 28 5 Soho House Clubs claim the arbitration agreement in this case is governed by the FAA. (Mot. Compel 4; Reply Compel 1.) Plaintiffs do not dispute this. (See generally Opp’n Mot. Compel.) 1 the Court with a complete copy of either DRA, thus preventing the Court’s requisite 2 review. 3 A complete copy of the arbitration agreement is essential where, as here, the 4 language of the agreement informs the Court’s analysis. See e.g. Kingsburg Apple 5 Packers, Inc. v. Ballantine Produce Co., Inc., No. 1:09-cv-00901 AWI JLT, 6 2012 WL 718853, at *3 (E.D. Cal. Mar. 5, 2012) (looking first to the plain language 7 of the agreement to determine whether an arbitration agreement covers specific 8 claims). For example, the parties dispute whether the DRA covers Plaintiffs’ wage 9 and hour claims and whether Plaintiffs waived their rights to bring Class Action and 10 PAGA claims. (Mot. Compel 8–12; Opp’n Mot. Compel 9–10.) However, the 11 “Claims Covered Under the DRA” provision in the DRA is incomplete because 12 sentences are missing, and certain words are covered by website interface menus. 13 (See Correa DRA 3–46; Vasquez DRA 3–47.) The “Mutual Promise” provision 14 following the “Scope of the Class Action Waiver” section is also incomplete such that 15 the Court cannot ascertain the parties’ promise regarding class action claims. (See 16 Correa DRA 4–5; Vasquez DRA 4–5.) Moreover, in their argument against 17 substantive unconscionability, Soho House Clubs state that the DRA’s severability 18 provision “delegated to the arbitrator the power to sever any unenforceable provision 19 from the [DRA].” (Reply Compel 6–7.) However, the entire “Severability” provision 20 is obscured and effectively absent from the copies of the DRA submitted to the Court. 21 (See Correa DRA 6–7; Vasquez DRA 6–7.) Accordingly, the Court cannot determine 22 the DRA’s scope and enforceability because material portions of “the plain language 23 of the agreement” are missing or obscured. Kingsburg Apple Packers, 24 2012 WL 718853, at *3; Brennan, 796 F.3d at 1130. 25 26 27 28 6 The Court cites to the page number reflected at the bottom right corner of the DRA. 7 The Court cites to the page number reflected at the bottom right corner of the DRA. 1 As essential terms of the DRA are missing, obscured, or incomplete, the Court 2 | cannot determine whether Plaintiffs’ claims fall within the scope of the arbitration 3 || agreement or whether any terms render the agreement unenforceable. The Court thus denies Soho House Clubs’ Motion to Compel. 5 Vv. CONCLUSION 6 For the reasons discussed above, the Court DENIES Plaintiffs’ Motion to 7 || Remand, (ECF No. 9), and Soho House Clubs’ Motion to Compel Arbitration, (ECF 8 | No. 10). 9 10 IT IS SO ORDERED. 1] 12 November 27, 2024 ~ 13 NB. 14 Kx Midi hf 15 OTIS oe “ HT, I 16 UNITED STATES DISTRICT JUDGE 17 18 19 20 21 22 23 24 25 26 27 28