Harper v. Charter Communications, LLC ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 LIONEL HARPER, DANIEL SINCLAIR, No. 2:19-cv-00902 WBS DMC HASSAN TURNER, LUIS VAZQUEZ, and 13 PEDRO ABASCAL, individually and on behalf of all others 14 similarly situated and all ORDER RE: DEFENDANT’S MOTIONS aggrieved employees, TO COMPEL ARBITRATION 15 Plaintiffs, 16 v. 17 CHARTER COMMUNICATIONS, LLC, 18 Defendant. 19 20 21 ----oo0oo---- 22 Plaintiffs Lionel Harper, Daniel Sinclair, Hassan 23 Turner, Luis Vazquez, and Pedro Abascal (“plaintiffs”) brought 24 this putative class action against their former employer, Charter 25 Communications, alleging various violations of the California 26 Labor Code. Among other things, plaintiffs allege that Charter 27 misclassified them and other California employees as “outside 28 salespersons,” failed to pay them overtime wages, failed to 1 provide meal periods or rest breaks (or premium wages in lieu 2 thereof), and provided inaccurate wage statements. (See 3 generally Second Amended Complaint (“SAC”) (Docket No. 147).) 4 Charter now moves to (1) compel arbitration of plaintiff Harper’s 5 claims and stay the action and (2) compel arbitration of 6 plaintiff Turner, Vazquez, and Abascal’s claims and dismiss them 7 from the case. (Mots. to Compel Arbitration (Docket Nos. 162, 8 165).)1 9 I. Facts & Procedural History 10 Much of this case’s factual background is set forth in 11 the court’s accompanying Order Re: Plaintiffs’ Motion to Modify 12 the Scheduling Order and for Leave to File a Third Amended 13 Complaint. Accordingly, the court will not repeat it here except 14 where relevant to the instant motions. 15 A. Plaintiff Harper 16 Plaintiff Harper worked for Charter from September 2017 17 to March 2018. (SAC at ¶ 5 (Docket No. 147).) Upon hire, Harper 18 signed an agreement to arbitrate “any and all claims, disputes, 19 and/or controversies between [Harper] and Charter arising from or 20 related to [Harper’s] employment with Charter,” designating JAMS 21 22 1 The parties have requested that the court take judicial notice of two filings in Harper’s related FEHA case, other 23 documents filed in this litigation, the American Arbitration Association’s rules and procedures, and two unpublished Los 24 Angeles Superior Court decisions addressing Charter’s motions to compel arbitration in other cases. (See Docket Nos. 171, 184, 25 185.) Plaintiffs object to Charter’s request as to the Los Angeles Superior Court decisions. (See Docket No. 191.) Because 26 the court does not find these materials relevant to this matter 27 or helpful in deciding any of the issues currently before the court, however, the court declines to take judicial notice of 28 1 as the arbitration provider and stating that JAMS rules, 2 procedures, and policies would govern arbitrations under that 3 agreement (the “JAMS Agreement”). (Order re Mot. to Compel Arb. 4 at 2 (Docket No. 24).) The JAMS Agreement included a waiver of 5 representative, collective, and class actions (the “Waiver”) and 6 a severance and so-called “poison pill” provision. (Id. at 2.) 7 The severance provision stated that if any part of the agreement 8 was found to be void or unenforceable, that part would be severed 9 and the remainder enforced. (Id. at 2-3.) It went on to state 10 one exception (the “poison pill”): that if a dispute involved a 11 representative, collective, or class action claim, and the Waiver 12 were found to be invalid or unenforceable, “then th[e] entire 13 Agreement . . . shall be null and void and the dispute will not 14 be arbitrable.” (Id. at 3.) 15 In October 2017, while Harper was still employed by 16 Charter, Charter adopted a new arbitration agreement requiring 17 arbitration of claims via “Solution Channel,” Charter’s 18 employment-based legal dispute resolution program, which provided 19 for arbitration under the rules of the American Arbitration 20 Association (the “Solution Channel Agreement”). (Id. at 3.) 21 When announcing the change, Charter notified employees that they 22 would be bound by the Solution Channel Agreement unless they 23 opted out within thirty days. (Id.) Harper did not do so. 24 (Id.) 25 In November 2018, Harper filed a Demand for Arbitration 26 and Request for Rulings as to Inarbitrability with JAMS, seeking 27 a ruling on whether his employment-related grievances against 28 Charter could be arbitrated under the JAMS Agreement. (Id. at 5- 1 6.) Charter consented to and participated in the ensuing 2 arbitration process with JAMS, and in April 2019 an arbitrator 3 issued an award finding that Harper’s wage-and-hour claims were 4 inarbitrable and dismissing the arbitration. (Id. at 6; see Mot. 5 to Confirm Arb. Award, Ex. 16 (“Order of Dismissal”), at 157-66 6 (Docket No. 9-1).) 7 Specifically, the arbitrator determined that because 8 pre-dispute waivers of representative claims brought under PAGA 9 are unenforceable under California law, the JAMS Agreement Waiver 10 could not be enforced. (Order of Dismissal at 159-61 (Docket No. 11 9-1) (citing Iskanian v. CLS Transp. L.A. LLC, 59 Cal. 4th 348, 12 384 (2014)).) The arbitrator accordingly determined that this 13 activated the poison pill, nullifying the entire agreement. 14 (Id. at 163-65.) The arbitrator rejected Charter’s argument that 15 the poison pill be limited so as to nullify the agreement only as 16 to the representative, collective, or class action claim at issue 17 as contrary to the JAMS Agreement’s plain text, which included no 18 such limitation. (Id.) 19 In May 2019, after Harper had initiated this action in 20 state court, Charter sought to enforce the Solution Channel 21 Agreement against Harper, who refused. (Order re Mot. to Compel 22 Arb. at 6-7 (Docket No. 24).) In August 2019, this court 23 confirmed and entered judgment pursuant to the JAMS arbitration 24 award. (Id. at 19.) Further, the court found that there had 25 been a novation as a result of Charter’s acquiescence to 26 arbitration under the JAMS Agreement rather than the Solution 27 Channel Agreement, held that any rights Charter had as against 28 Harper under the Solution Channel Agreement with respect to his 1 wage-and-hour claims were thus “dead and extinguished,” and 2 denied a motion by Charter to compel arbitration under the 3 Solution Channel Agreement. (Id. at 18-20.)2 4 In May 2021, Harper again sought employment with 5 Charter via an online application. (Fries Decl. at ¶ 16, Ex. D 6 (Docket No. 162-1).) When proceeding through Charter’s online 7 application, applicants are presented with a webpage featuring 8 information about Charter’s Solution Channel Agreement, with 9 links to the agreement itself and to Solution Channel Program 10 Guidelines, both of which applicants may save and print. (Id. at 11 ¶¶ 7-10.) To proceed with their application, applicants are 12 required to affirmatively agree to be bound by the Solution 13 Channel Agreement by clicking an “I Agree” button. (Id. at 14 ¶ 11.) They are informed that if they do not agree, they will be 15 removed from consideration for employment; their application is 16 not submitted, and they are given the option to begin the 17 application process again. (Id. at ¶¶ 12-13.) On May 23, 2021, 18 Harper consented to the Solution Channel Agreement and submitted 19 an online application to Charter. (Id. at ¶ 16, Ex. D.) 20 2 In late 2019, the court also adjudicated a separate, 21 related action between Harper and Charter brought under 22 California’s Fair Employment and Housing Act (“FEHA”). See Harper v. Charter Comms., LLC, 2:19-cv-01749 WBS DMC, 2019 WL 23 6918280 (E.D. Cal. Dec. 18, 2019). There, Harper had also sought to arbitrate his FEHA claims under the JAMS agreement, but this 24 time Charter did not participate. Id. at *2. The court held that because “Charter did not engage with [Harper’s] FEHA claims” 25 in the manner it had with his wage-and-hour claims, there had been no novation of arbitration agreements with respect to the 26 FEHA claims. Id. at *3. After determining that the Solution 27 Channel Agreement applied to Harper’s FEHA claims and was valid, the court granted a motion by Charter to compel arbitration of 28 1 B. Plaintiffs Turner, Vazquez, and Abascal 2 In addition to consenting to the Solution Channel 3 Agreement in order to complete Charter’s online application, 4 individuals who accept offers of employment from Charter are 5 again required to consent to the same agreement, or else they 6 cannot become a Charter employee. (Fries Decl. re Turner at 7 ¶¶ 9-18 (Docket No. 165-2).) Plaintiff Turner submitted an 8 online application on May 23, 2018, consenting to the Solution 9 Channel Agreement, and subsequently completed Charter’s employee 10 onboarding process, consenting to the agreement again. (Id. at 11 ¶¶ 8, 19, Exs. A & B.) Plaintiff Vazquez did the same, 12 submitting his application on October 9, 2019. (Fries Decl. re 13 Vazquez at ¶¶ 8, 19, Exs. A & B.) Plaintiff Abascal did as well, 14 submitting his application on November 5, 2019. (Fries Decl. re 15 Abascal at ¶¶ 8, 19, Exs. A & B.) 16 C. The Solution Channel Agreement 17 The Solution Channel Agreement contains several 18 provisions currently at issue. It requires parties to the 19 agreement to resolve “all disputes, claims and controversies that 20 could be asserted in court or before an administrative agency for 21 which you or Charter have an alleged cause of action related to 22 pre-employment, employment, employment termination or post- 23 employment-related claims,” including wage-and-hour-related 24 claims, through binding arbitration. (Fries Aff., Ex. C 25 (“Solution Channel Agreement”), at §§ A, B(1) (Docket No. 165- 26 2).) 27 The agreement specifically excludes certain claims from 28 arbitration, including “[a]ny claims that have already been filed 1 in federal or state court at the time you execute this Agreement, 2 provided that such claims were not previously subject to any 3 arbitration agreement.” (Id. at § C(14).) It also includes a 4 merger clause, providing that the Solution Channel Agreement 5 represents the complete agreement between parties on the 6 resolution of covered disputes, but noting that “this Agreement 7 will not apply to the resolution of any charges, complaints, or 8 lawsuits that have been filed with an administrative agency or 9 court before the Effective Date of this Agreement.” (Id. at 10 § P.) Finally, like the JAMS Agreement, the Solution Channel 11 Agreement includes a waiver of representative, class, or 12 collective action claims. (Id. at § D.) 13 II. Analysis 14 The Federal Arbitration Act (“FAA”) provides that a 15 written provision in a “contract evidencing a transaction 16 involving commerce to settle by arbitration a controversy 17 thereafter arising out of such contract . . . shall be valid, 18 irrevocable, and enforceable, save upon such grounds as exist at 19 law or in equity for the revocation of any contract.” 9 U.S.C. 20 § 2. Because arbitration is a matter of contract, “the central 21 . . . purpose of the FAA is to ensure that private agreements to 22 arbitrate are enforced according to their terms.” Stolt-Nielsen 23 S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 682 (2010) 24 (internal quotations omitted); see also Perry v. Thomas, 482 U.S. 25 483, 490 (1987) (under the FAA, arbitration agreements “must be 26 rigorously enforced”) (internal quotations omitted, alterations 27 adopted). 28 The FAA “leaves no place for the exercise of discretion 1 by a district court, but instead mandates that district courts 2 shall direct the parties to proceed to arbitration on issues as 3 to which an arbitration agreement has been signed.” Dean Witter 4 Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). Accordingly, 5 “the FAA limits courts’ involvement to determining (1) whether a 6 valid agreement to arbitrate exists and, if it does, (2) whether 7 the agreement encompasses the dispute at issue.” Cox v. Ocean 8 View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (internal 9 quotations omitted). 10 “[A]s a matter of federal law, any doubts concerning 11 the scope of arbitrable issues should be resolved in favor of 12 arbitration, whether the problem at hand is a construction of the 13 contract language itself or an allegation of waiver, delay, or 14 like defense to arbitrability.” Moses H. Cone Mem’l Hosp. v. 15 Mercury Const. Corp., 460 U.S. 1, 24–25 (1983); see Poublon v. 16 C.H. Robinson Co., 846 F.3d 1251, 1259 (9th Cir. 2017) (same). 17 Upon a showing that a party has failed to comply with a valid 18 arbitration agreement, the district court must issue an order 19 compelling arbitration. See Cohen v. Wedbush, Noble Cooke, Inc., 20 841 F.2d 282, 285 (9th Cir. 1988). 21 The primary exception to courts’ obligation to enforce 22 arbitration agreements under the FAA comes from the Act’s “saving 23 clause,” which “allows courts to refuse to enforce arbitration 24 agreements ‘upon such grounds as exist at law or in equity for 25 the revocation of any contract.’” Epic Sys. Corp. v. Lewis, 138 26 S. Ct. 1612, 1622 (2018) (quoting 9 U.S.C. § 2). Such “generally 27 applicable contract defenses” most frequently include “fraud, 28 duress, or unconscionability,” but do not include “defenses that 1 apply only to arbitration.” AT&T Mobility LLC v. Concepcion, 563 2 U.S. 333, 339 (2011) (internal quotations omitted). 3 A. Applicability of the Solution Channel Agreement 4 Charter seeks to compel plaintiffs Harper, Turner, 5 Vazquez, and Abascal to submit their California Labor Code and 6 Unfair Competition Law (“UCL”) claims to arbitration on an 7 individual basis. (See Mot. to Compel Arb. re Harper at 1 8 (Docket No. 162); Mot. to Compel Arb. re Turner, Vazquez, & 9 Abascal at 1 (Docket No. 165).) Plaintiffs contend that to do 10 so, Charter must prove that (1) a valid agreement to arbitrate 11 exists and (2) the agreement encompasses the claims Charter seeks 12 to arbitrate. (See Opp. to Mot. to Compel Arb. at 16-17 (citing 13 Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 14 (9th Cir. 2000)) (Docket No. 172); Opp. to Mot. to Compel Arb. at 15 14 (same) (Docket No. 173).) 16 Turner, Vazquez, and Abascal acknowledge that they each 17 executed the Solution Channel Agreement both when applying for 18 employment with Charter and when accepting their jobs, (see Opp. 19 to Mot. to Compel Arb. at 9-11 (Docket No. 173)), and Harper 20 acknowledges that he did when re-applying for employment with 21 Charter in May 2021, (see Opp. to Mot. to Compel Arb. at 14 22 (Docket No. 172)). On this basis, plaintiffs concede that a 23 valid agreement to arbitrate exists. (See id. at 17; Opp. to 24 Mot. to Compel Arb. at 14 (Docket No. 173).) Accordingly, the 25 question becomes whether the agreement applies to plaintiffs’ 26 Labor Code and UCL claims, of which Charter seeks to compel 27 28 1 arbitration.3 2 The Solution Channel Agreement provides that “[y]ou and 3 Charter mutually agree that . . . any dispute arising out of or 4 relating to your pre-employment application and/or employment 5 with Charter or the termination of that relationship, except as 6 specifically excluded below, must be resolved through binding 7 arbitration.” (Solution Channel Agreement at § A (Docket No. 8 165-2).) This is followed by a section titled “Covered Claims,” 9 (id. at § B), which specifies that such disputes include “wage 10 and hour-based claims including claims for unpaid wages, 11 commissions, or other compensations or penalties (including meal 12 and rest break claims, claims for inaccurate wage statements, 13 [and] claims for reimbursement of expenses),” (id. at § B(1)). 14 The parties do not dispute that the claims of which Charter seeks 15 to compel arbitration clearly fall into this category. 16 However, that section is followed by another, titled 17 “Excluded Claims,” which lists a variety of claims to which the 18 “Covered Claims” section does not apply. (See id. at § C.) 19 Notably for purposes of the instant motions, these include “[a]ny 20 claims that have already been filed in federal or state court at 21 the time you execute this Agreement, provided that such claims 22 were not previously subject to any arbitration agreement.” (Id. 23 24 3 Although at oral argument the parties briefly discussed whether questions of arbitrability should themselves be submitted 25 to an arbitrator, neither party raised this issue in their briefing. Accordingly, this court will decide whether 26 plaintiffs’ claims are arbitrable rather than submit the issue to 27 the arbitrator. See also Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011) (gateway issues of arbitrability are presumptively 28 1 at § C(14).) The aforementioned merger clause, which appears 2 later in the agreement, also provides that “this Agreement will 3 not apply to the resolution of any charges, complaints, or 4 lawsuits that have been filed with an administrative agency or 5 court before the Effective Date of this Agreement.” (Id. at 6 § P.) 7 Plaintiffs argue that these two provisions operate to 8 exclude plaintiffs Vazquez and Abascal’s claims from mandatory 9 arbitration under the agreement. Specifically, they argue that 10 because plaintiff Harper had already filed this action by the 11 time Vazquez and Abascal executed the agreement, their claims 12 qualify as having “already been filed in . . . court” and having 13 “been filed with a[ ] . . . court before the Effective Date of 14 th[e] Agreement” under these provisions.4 (See Opp. to Mot. to 15 Compel Arb. at 15-19 (Docket No. 173).) 16 They argue the same as to Harper, given that he 17 executed the operative agreement in May 2021, after bringing this 18 action, and contend that his claims “were not previously subject 19 to any agreement” pursuant to section C(14) because the 20 agreements he previously signed were no longer in effect by May 21 2021. (See Opp. to Mot. to Compel Arb. at 16-22 (Docket No. 22 172).) In light of the differing arguments put forward with 23 respect to Harper and to the other plaintiffs for whom Charter 24 seeks to compel arbitration, the court will address the two 25 4 Plaintiffs do not make this argument with respect to 26 plaintiff Turner, as he had already executed the agreement when 27 this litigation began, and therefore they concede that sections C(14) and P do not apply to him. (See Opp. to Mot. to Compel 28 1 groups separately. 2 1. Plaintiffs Turner, Vazquez, and Abascal 3 Charter argues that Vazquez and Abascal improperly seek 4 to avoid arbitration by, in essence, piggybacking off of Harper’s 5 already-filed claims, which they did not join until well after 6 executing the agreement. (See Def.’s Reply at 5-10 (Docket No. 7 182).) It contends that because section C creates exceptions to 8 section B’s requirement that various claims be arbitrated, the 9 two sections must be read together, and that because section B by 10 its terms applies to “claims . . . for which you or Charter have 11 an alleged cause of action,” the exclusion contained in section 12 C(14) is properly read to exclude only already-filed claims 13 between the signing party and Charter, rather than any already- 14 filed claims to which Charter is a party. (Solution Channel 15 Agreement at § B(1) (emphasis added) (Docket No. 165-2); see id. 16 at 5-6.) The court agrees. 17 Because, as a general matter, contract interpretation 18 is a matter of state law, the court looks to California law in 19 construing these provisions. See DIRECTV, Inc. v. Imburgia, 577 20 U.S. 47, 54 (2015) (citing Volt Info. Scis., Inc. v. Bd. of Trs. 21 of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989)). 22 Three provisions of the California Civil Code, governing the 23 interpretation of contracts, are relevant here. First, “[t]he 24 language of a contract is to govern its interpretation, if the 25 language is clear and explicit, and does not involve an 26 absurdity.” Cal. Civ. Code § 1638. Second, “[a] contract must 27 be so interpreted as to give effect to the mutual intention of 28 the parties as it existed at the time of contracting, so far as 1 the same is ascertainable and lawful.” Id. at § 1636. Third, 2 “[t]he whole of a contract is to be taken together, so as to give 3 effect to every part, if reasonably practicable, each clause 4 helping to interpret the other.” Id. at § 1641. 5 Under these provisions, it is clear that section C(14) 6 of the agreement cannot be read to prevent arbitration of Vazquez 7 and Abascal’s claims by virtue of Harper’s previously filed 8 claim. Because section C specifically lists exclusions to 9 section B, the two must be read together. See also id. Per 10 section B’s clear language, claims covered under that section — 11 and thus excluded under section C — are those between “You” 12 (i.e., the individual signatory) “and Charter.” This clearly 13 signifies an intention to require arbitration of claims — and 14 thus, under section C, exclude from arbitration — only claims 15 that might arise as between the signatory and Charter. See id. 16 at §§ 1636, 1638. To allow signatories to avoid arbitration of 17 otherwise-covered claims by joining suits filed by individuals 18 not party to the contract would plainly frustrate this intention. 19 For similar reasons, section P likewise does not 20 exclude Vazquez and Abascal’s claims from arbitration. As noted 21 above, the Solution Channel Agreement’s core provisions specify 22 that it applies to disputes between “You and Charter.” Although 23 section P does not directly incorporate this language in the 24 manner that section C does, to apply it in plaintiffs’ preferred 25 manner would run counter to the contract’s central purpose, which 26 is to require arbitration of disputes. See id. at § 1636. And 27 to the extent that this omission creates a conflict between 28 sections P and C(14), “in a contract, when a general and 1 particular provision are inconsistent, the latter is paramount to 2 the former,” meaning that “a particular intent will control a 3 general one that is inconsistent with it.” Karpinski v. Smitty’s 4 Bar, Inc., 246 Cal. App. 4th 456, 464 (1st Dist. 2016) (internal 5 quotation marks and citation omitted). 6 For these reasons, together with the FAA’s mandate that 7 any doubts as to an arbitration agreement’s applicability be 8 resolved in favor of arbitration, see Moses H. Cone Mem’l Hosp., 9 460 U.S. at 24–25; Poublon, 846 F.3d at 1259, the court concludes 10 that the Solution Channel Agreement applies to compel arbitration 11 of Vazquez and Abascal’s claims. Plaintiffs do not contest that 12 the agreement applies to Turner’s claims, and sections C(14) and 13 P clearly do not exclude them, as this action had not yet been 14 filed at the time he executed the agreement. Accordingly, the 15 court concludes that the Solution Channel Agreement applies to 16 Turner’s claims as well. 17 2. Plaintiff Harper 18 Plaintiffs also contend that section P of the agreement 19 excludes Harper’s claims from its coverage. (See Opp. to Mot. to 20 Compel Arb. at 18-19 (Docket No. 172).) They further argue that, 21 because this court confirmed the JAMS arbitrator’s award finding 22 that the JAMS agreement was “null and void,” and because it 23 subsequently held that Charter’s acquiescence to the JAMS 24 arbitration effected a novation of Harper’s first Solution 25 Channel contract — rendering it “dead and extinguished” — 26 Harper’s claims do not qualify as “previously subject to any 27 arbitration agreement” under section C(14). (See id. at 20-22.) 28 Accordingly, they argue that section C(14) excludes Harper’s 1 claims from coverage under the agreement as well. (See id.) 2 As noted above, section C(14) provides that the 3 agreement excludes “[a]ny claims that have already been filed in 4 federal or state court at the time you execute this Agreement, 5 provided that such claims were not previously subject to any 6 arbitration agreement.” (Solution Channel Agreement at § C(14) 7 (Docket No. 165-2).) Thus, because it is undisputed that 8 Harper’s claims had already been filed in court when he executed 9 the agreement, (see Opp. to Mot. to Compel Arb. at 20 (Docket No. 10 172)), the only question is whether those claims “were . . . 11 previously subject to any arbitration agreement,” (Solution 12 Channel Agreement at § C(14) (Docket No. 165-2)). The court 13 concludes that they were. 14 While Harper was employed by Charter, he consented to 15 the JAMS Agreement, and later to the Solution Channel Agreement. 16 Plaintiffs argue that the JAMS arbitrator’s determination that 17 the JAMS Agreement was invalid means that Harper’s claims were 18 never “subject to” that agreement, contending that claims are 19 only “subject to” an arbitration agreement if they are validly 20 required to be arbitrated under that agreement. (See Opp. to 21 Mot. to Compel Arb. at 20 (Docket No. 172).) 22 The court assumes, for these purposes, that plaintiffs’ 23 construction of “subject to” is correct, such that Harper’s 24 claims were not “previously subject to” the JAMS Agreement. Even 25 so, it is clear that they were nonetheless “previously subject 26 to” the Solution Channel Agreement. Although this court 27 determined that there was a subsequent novation, extinguishing 28 that agreement, the fact remains that for a period of time -- 1 beginning when Harper first executed the Solution Channel 2 Agreement and ending with Charter’s acquiescence to the JAMS 3 arbitration -- Charter could have asserted the Solution Channel 4 Agreement against Harper with respect to any wage-and-hour claims 5 he had. Under the plain meaning of “previous” -- earlier in time 6 -- Harper’s claims, at the time he executed the Solution Channel 7 Agreement in May 2021, were “previously subject to” the earlier- 8 signed copy of the same agreement. As such, Harper’s claims are 9 not excluded from arbitration under section C(14).5 10 To the extent that Harper challenges Charter’s ability 11 to compel him to arbitrate his individual claims arising out of 12 his prior employment because his latest execution of the Solution 13 Channel Agreement occurred when he applied for another position, 14 (see id. at 14), at least one other district court in California 15 has already held that the Solution Channel Agreement applies in 16 such circumstances. In Durruthy v. Charter Communications, LLC, 17 like in this case, the plaintiff was hired by Charter, was later 18 terminated, subsequently reapplied for employment, and in doing 19 so executed the agreement, which Charter then sought to enforce 20 against her. Durruthy, 20-CV-1374-W-MSB, 2020 WL 6871048, at *1 21 (S.D. Cal. Nov. 23, 2020). As the court in the Southern District 22 5 Plaintiffs contend that to find that Harper’s claims 23 were previously subject to the initial Solution Channel Agreement, the court would need to reconsider whether that 24 agreement was extinguished by the previously mentioned novation, which they argue the court is precluded from doing under the law 25 of the case doctrine. (See Opp. to Mot. to Compel Arb. at 21 (Docket No. 172).) However, plaintiffs are mistaken in their 26 logic, as finding that an applicable agreement had terminated is 27 not the same as concluding that it was never applicable in the first place. Although the court did the former, it did not do 28 1 of California observed: 2 The Agreement covers “any dispute arising out of or relating to [an applicant’s] 3 preemployment application and/or employment with Charter or the termination of that 4 relationship . . . .” The Agreement does not limit its application to future 5 employment, nor does it exclude claims from prior employment periods. Therefore, an 6 objective reading supports that “employment” reasonably means any employment period 7 between the two parties of the agreement. . . . . Plaintiff’s alleged lack of consent 8 to arbitrate claims from her prior employment period with Defendant are absent 9 from the Agreement, and “unexpressed subjective intentions are irrelevant 10 . . . .” 11 Id. at *4-5 (quoting Martinez v. BaronHR, Inc., 51 Cal. 12 App. 5th 962, 970 (2020)) (alterations in original). This court 13 agrees with the Durruthy court’s analysis of this issue.6 14 For the foregoing reasons, the court concludes that the 15 Solution Channel Agreement applies to Harper’s claims. 16 B. Unconscionability 17 Plaintiffs also argue that the Solution Channel 18 Agreement is unconscionable. (See id. at 22-38; Opp. to Mot. to 19 Compel Arb. at 19-34 (Docket No. 173).) If true, this would mean 20 that the contract was not validly entered into in the first 21 instance, allowing the court to invalidate the agreement pursuant 22 to the FAA’s saving clause. See Concepcion, 563 U.S. at 339. 23 “Unconscionability under California law has ‘both a 24 procedural and a substantive element, the former focusing on 25 oppression or surprise due to unequal bargaining power, the 26 27 6 This court’s agreement with the Durruthy court’s evaluation of the Solution Channel Agreement, however, does not 28 1 latter on overly harsh or one-sided results.’” Kilgore v. 2 KeyBank, Nat’l Ass’n, 673 F.3d 947, 963 (9th Cir. 2012) (quoting 3 Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 4 83, 99 (2000)). While courts “use a ‘sliding scale’ in analyzing 5 these two elements . . . . [n]o matter how heavily one side of 6 the scale tips . . . , both procedural and substantive 7 unconscionability are required for a court to hold an arbitration 8 agreement unenforceable.” Id. (citing Armendariz, 24 Cal. 4th at 9 99). 10 This court previously assessed whether the Solution 11 Channel Agreement is unconscionable in the related action between 12 plaintiff Harper and Charter. See Harper v. Charter Comms., LLC, 13 2:19-cv-01749 WBS DMC, 2019 WL 6918280, at *5-6 (E.D. Cal. Dec. 14 18, 2019). There, the court determined that the agreement was 15 not procedurally unconscionable, relying in large part on the 16 fact that when Harper was first confronted with the Solution 17 Channel Agreement, it was via an email notifying employees of 18 their ability to opt out of the agreement within thirty days. 19 Id. at *1, 5 (citing Kilgore v. KeyBank, Nat’l Ass’n, 718 F.3d 20 1052, 1058-59 (9th Cir. 2013) (en banc) (deeming an arbitration 21 agreement not procedurally unconscionable because it noted the 22 option to opt out within sixty days of signing)). Here, on the 23 other hand, there is no indication that plaintiffs were given the 24 same option to opt out; indeed, they assert that they received 25 none, (see Opp. to Mot. to Compel Arb. at 24 (Docket No. 172); 26 Opp. to Mot. to Compel Arb. at 21 (Docket No. 173)), which 27 Charter does not contest, (see Def.’s Reply at 15-17 (Docket No. 28 182); Def.’s Reply at 16-18 (Docket No. 183)). 1 The Ninth Circuit has previously held that an 2 arbitration agreement was procedurally unconscionable where it 3 was presented to employees “on an adhere-or-reject basis,” with 4 no opportunity to opt out. See Ingle v. Circuit City Stores, 5 Inc., 328 F.3d 1165, 1172 (9th Cir. 2003); see also Steele v. Am. 6 Mortg. Mgmt. Servs., 2:12-cv-00085 WBS JFM, 2012 WL 5349511, at 7 *4-5 (E.D. Cal. Oct. 26, 2012) (holding pre-employment 8 arbitration agreement procedurally unconscionable because it did 9 not contain an opt-out clause). Conversely, it has also held 10 that an arbitration agreement that included an opt-out provision 11 was not procedurally unconscionable. See Mohamed v. Uber Techs., 12 Inc., 848 F.3d 1201, 1211 (9th Cir. 2016). 13 Thus, an arbitration agreement that individuals are 14 required to sign as a condition of employment, with no ability to 15 opt out, is procedurally unconscionable, though Ninth Circuit 16 precedent also establishes that this form of procedural 17 unconscionability is “low” on California’s sliding scale 18 analysis. See Poublon, 846 F.3d at 1261. In such a situation, 19 if “there is no other indication of oppression or surprise, then 20 the agreement will be enforceable unless the degree of 21 substantive unconscionability is high.” Id. 22 Regardless of the particular degree of procedural 23 unconscionability present here, however, in order for their 24 unconscionability defense to succeed, plaintiffs must also show 25 that the agreement is substantively unconscionable. See Kilgore, 26 673 F.3d at 963. And as this court previously held in the 27 related action between Harper and Charter, in which Charter 28 sought to enforce the Solution Channel Agreement against him with 1 respect to claims not present in the current litigation, the 2 agreement is not substantively unconscionable. See Harper, 2019 3 WL 6918280, at *5-6.7 Because the agreement at issue in this 4 litigation is the same as the one upon which the court ruled in 5 the separate litigation, and plaintiffs do not allege that it has 6 changed,8 the court again concludes that the Solution Channel 7 Agreement is not substantively unconscionable. 8 Because the Solution Channel Agreement is not 9 substantively unconscionable, plaintiffs’ unconscionability 10 defense must fail. 11 C. California Labor Code Section 432.6 12 7 Specifically, the court determined that (1) the Solution Channel review process was not one-sided, as Harper 13 contended, but rather its requirements applied equally to 14 employees and to Charter; (2) the agreement did not enable Charter to conclusively decide whether a claim is arbitrable, 15 instead providing claimants the ability to proceed with arbitration on this and other issues; and (3) a provision of the 16 agreement requiring “each party [to] bear its own attorney’s fees regardless of the action brought,” although unenforceable under 17 California law, could be severed pursuant to the agreement’s 18 severability clause in light of the court’s determination that the agreement was “not otherwise permeated by unconscionability.” 19 See Harper, 2019 WL 6918280, at *5-6 (citing Serpa v. Cal. Sur. Investigations, Inc., 215 Cal. App. 4th 695, 709-10 (2d Dist. 20 2013)). 8 Although plaintiff Harper refers to the Solution 21 Channel Agreement to which he consented the first time as the 22 “Old SC Agreement” and the one to which he consented when re- applying as the “New SC Agreement,” his bases for these 23 differences in nomenclature are that the former was included in an email informing him that he could opt out, whereas the latter 24 was not — not that the agreement itself had changed. (See Opp. to Mot. to Compel Arb. at 9 n.1 (Docket No. 172).) 25 Moreover, the Solution Channel Agreement is dated September 25, 2017 — well before plaintiffs Turner, Vazquez, and 26 Abascal first applied for employment with Charter — further 27 indicating that it had not changed between when plaintiff Harper first signed it and when they did. (See Solution Channel 28 1 Finally, in supplemental briefing, plaintiffs argue 2 that the Ninth Circuit’s recent decision in Chamber of Commerce 3 of the United States v. Bonta, — F.4th —, 2021 WL 4187860 (9th 4 Cir. Sept. 15, 2021), precludes enforcement of the Solution 5 Channel Agreement against Harper. (See Not. of Supp. Auth. at 2 6 (Docket No. 196).) That decision upheld part of California Labor 7 Code section 432.6, which prohibits employers from “requir[ing] 8 any applicant for employment or any employee to waive any right, 9 forum, or procedure” established under the Labor Code or 10 California Fair Employment and Housing Act as a condition of 11 employment, on the basis that it was not preempted by the FAA.9 12 See id. at *4-10; Cal. Lab. Code § 432.6(a). 13 Plaintiffs contend that under Chamber of Commerce, 14 Charter’s use of the Solution Channel Agreement violates section 15 432.6 because Harper’s consent to the agreement was a mandatory 16 condition for consideration of his application and for any 17 subsequent employment, with no ability to opt out. (See Not. of 18 Supp. Auth. at 2 (Docket No. 196).) Per Chamber of Commerce’s 19 clear language, however, whether this requirement violated 20 section 432.6 has no effect on the court’s present decision to 21 enforce the Solution Channel Agreement: “§ 432.6 does not make 22 invalid or unenforceable any agreement to arbitrate, even if such 23 agreement is consummated in violation of the statute.” 2021 WL 24 4187860, at *7 (emphasis added); see also 2021 WL 4187860, at *6 25 9 Because section 432.6 came into effect after Turner, 26 Vazquez, and Abascal executed the Solution Channel Agreement, but 27 before Harper did in May 2021, plaintiffs only contend that the Ninth Circuit’s decision applies to Harper. (See Not. of Supp. 28 1 (“§ 432.6 cannot be used to invalidate, revoke, or fail to 2 enforce an arbitration agreement . . . .”). 3 The most that Chamber of Commerce does to aid employees 4 who seek to challenge arbitration agreements is to simply 5 reaffirm the applicability of the FAA’s saving clause to 6 arbitration agreements under section 432.6. See id. at *6 7 (citing Cal. Lab. Code § 432.6(f) (“Nothing in this section is 8 intended to invalidate a written arbitration agreement that is 9 otherwise enforceable under the [FAA].”)) (other citations 10 omitted). In doing so, the Ninth Circuit observed, in dicta: 11 [A]n employee may attempt to void an arbitration agreement that he was compelled 12 to enter as a condition of employment on the basis that it was not voluntary. If a court 13 were to find that such a lack of voluntariness is a generally applicable 14 contract defense that does not specifically target agreements to arbitrate, the 15 arbitration agreement may be voided in accordance with saving clause jurisprudence. 16 17 Id. at *9. However, here the court has addressed Harper’s 18 “generally applicable contract defense[s]” and determined that 19 they do not apply here. Chamber of Commerce thus has no impact 20 on this decision. 21 For the foregoing reasons, the court will grant 22 Charter’s motions to compel arbitration of plaintiffs Harper, 23 Turner, Vazquez, and Abascal’s individual claims. 24 D. Motions to Dismiss or Stay Judicial Proceedings 25 In its motion to compel arbitration of Harper’s Labor 26 Code and UCL claims, Charter requests that, should the court 27 grant that motion, the court stay this case -- including Harper’s 28 PAGA claim -- pending arbitration of the other claims. (See Mot. 1 to Compel Arb. re Harper at 23-24 (Docket No. 162).) Charter 2 suggests that although it has not sought arbitration of the PAGA 3 claim, staying proceedings as to the PAGA claim would avoid 4 conflicting rulings between this court as to the PAGA claim and 5 the arbitrator as to the other claims. (See id. at 24.) 6 Plaintiffs oppose this request, pointing out that because this 7 court will not be bound by any rulings the arbitrator might make, 8 staying Harper’s PAGA claim would not in fact avoid conflicting 9 rulings. (See Opp. to Mot. to Compel Arb. at 38-39 (Docket No. 10 172).) They further argue that proceedings as to the PAGA claim 11 should not be stayed because of the distinct nature of a PAGA 12 claim, which belongs to the state rather than to Harper. (See 13 id. at 39.) 14 Further, in its motion to compel arbitration of Turner, 15 Vazquez, and Abascal’s claims, Charter also requests that, should 16 the court grant that motion, the court dismiss those plaintiffs 17 from the case. (See Mot. to Compel Arb. re Turner, Vazquez, & 18 Abascal at 20-21 (Docket No. 165).) Plaintiffs oppose this 19 request and instead request that the court stay proceedings as to 20 these plaintiffs pending arbitration of their individual claims. 21 (See Opp. to Mot. to Compel Arb. at 35 (Docket No. 173).) In 22 response to the court’s questioning at oral argument, counsel for 23 plaintiffs indicated that they preferred a stay of plaintiff 24 Sinclair’s individual claims pending arbitration of the other 25 plaintiffs’ individual claims. 26 The FAA provides that, where a suit presents “issue[s] 27 referable to arbitration under an agreement in writing for such 28 arbitration,” the court “shall on application of one of the 1 parties stay the trial of the action until such arbitration has 2 been had.” 9 U.S.C. § 3. Further, the Supreme Court has stated 3 that “[i]n some cases, it may be advisable to stay litigation 4 among the nonarbitrating parties pending the outcome of the 5 arbitration.” Moses H. Cone Memorial Hosp. v. Mercury Constr. 6 Corp., 460 U.S. 1, 20 n.23 (1983). 7 Because plaintiffs have requested a stay of Turner, 8 Vazquez, and Abascal’s individual claims, the court will stay 9 those claims pending arbitration. Additionally, because Charter 10 has requested that the court otherwise stay this case pending 11 arbitration of Harper’s individual claims, because plaintiffs’ 12 counsel supported a stay of Sinclair’s individual claims at oral 13 argument, and because the court agrees that a stay of Sinclair’s 14 claims pending arbitration is “advisable,” the court will stay 15 Sinclair’s individual claims pending arbitration as well. 16 However, because a stay would impede vindication of 17 California’s interests in enforcing the Labor Code through 18 representative PAGA actions, discussed above, and because the 19 PAGA claim represents a distinct “action” in this case, the court 20 will not stay Harper’s PAGA claim. See Jarboe v. Hanlees Auto 21 Grp., 53 Cal. App. 5th 539, 557 (1st Dist. 2020) (“Because a PAGA 22 claim is representative and does not belong to an employee 23 individually, an employer should not be able dictate how and 24 where the representative action proceeds.”). 25 IT IS THEREFORE ORDERED that Charter’s Motions to 26 Compel Arbitration (Docket Nos. 162, 165) be, and the same hereby 27 are, GRANTED. 28 IT IS FURTHER ORDERED that, as to the claims presented ee nn ne ne ne NE OS IE SNE I OO 1 in Counts One through Nine of the Second Amended Complaint only, 2 this action is STAYED pending arbitration of plaintiff Harper, 3 | Turner, Vazquez, and Abascal’s individual claims. 4 Dated: October 12, 2021 dbiblem Ah (hi.te— ° □□□□□□□□□□□□□□□□□□□□□□□□□□□ 6 UNITED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25