Baer v. Tesla Motors, Inc.

• Court: District Court, N.D. California
• Decided: August 1, 2024
• Docket: 4:23-cv-02274
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT

2 NORTHERN DISTRICT OF CALIFORNIA

5 ELIJAH BAER, ET AL., Case No. 4:23-CV-02274-YGR

6 Plaintiffs, ORDER GRANTING MOTION OF TESLA, INC. TO COMPEL ARBITRATION, DISMISS CLASS 7 v. CLAIMS, AND STAY INDIVIDUAL NON-PAGA CLAIMS 8 TESLA MOTORS, INC., A CALIFORNIA CORPORATION, AND DOES 1 THROUGH 10, 9 INCLUSIVE, Re: Dkt. No. 54.

10 Defendants.

11 This Court previously granted defendant Tesla, Inc.’s motion to compel arbitration as to all 12 but two plaintiffs. (Dkt. No. 49, Order Granting in Part Motion to Compel Arbitration (“First 13 Order”).) In so doing, the Court provided defendant additional time to submit further 14 documentation evidencing binding arbitration agreements signed by the remaining two plaintiffs, 15 Shontae and Sienna Stephens (“the Staffmark plaintiffs”). Tesla thus submits the instant motion and 16 requests that the Court, based on further documentation provided, grant its motion to treat the 17 Staffmark plaintiffs as it did the others. Having carefully considered the papers submitted and the 18 pleadings in this action, and for the reasons set forth below, the Court hereby GRANTS the Motion 19 to compel arbitration.1 20 I. BACKGROUND 21 The Court presumes the parties’ familiarity with the basic facts giving rise to this case. In 22 the First Order, the Court analyzed the Staffmark plaintiffs’ ostensible binding arbitration 23 agreement separately from those of the other plaintiffs. The Staffmark plaintiffs were technically 24 not employees of defendant. Rather, they worked for a third-party called Staffmark, and were 25 assigned employment duties at Tesla under contract. According to Tesla, the Staffmark plaintiffs 26 signed a non-disclosure agreement (“an NDA”) with Tesla which included an arbitration provision, 27

28 1 Pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7-1(b), the Court finds this motion appropriate for decision without oral argument. 1 but plaintiffs contest the authenticity of those signatures. The first motion to compel arbitration 2 contained only the signature pages of those NDAs along with wet signatures that Tesla claimed 3 evidenced consent to the NDA’s contents. In its First Order, the Court stated: . . . the record is incomplete. The parties have not provided the Court with complete copies 4 of the agreement the Staffmark plaintiffs signed. Thus, the Court is unable to determine 5 whether a commitment to arbitrate was such an express condition of employment or agreed upon by the Staffmark plaintiffs’ direct employer. Because plaintiffs have raised genuine 6 questions around the purported signature of the NDAs, the Court does not find, based on the record before it, that a valid arbitration agreement existed between these parties. 7 (First Order at 10.) However, the Court’s denial of the motion with regard to the Staffmark 8 plaintiffs was “without prejudice to the submission of further evidence which would answer the 9 Court’s questions.” (Id. at 11.) 10 Tesla moves this Court again, restating its arguments about the NDA’s validity but also 11 providing evidence of Staffmark plaintiffs’ agreements with their direct employer, Staffmark (the 12 “Staffmark agreements”). Tesla asserts that the arbitration agreement is binding as between itself 13 and these plaintiffs under language in those agreements. 14 II. LEGAL STANDARD 15 Agreements to arbitrate are valid and enforceable under the Federal Arbitration Act. See 9 16 U.S.C. § 2. Moreover, the Supreme Court has interpreted the Federal Arbitration Act (“FAA”) to 17 allow for the invalidation of arbitration provisions “by ‘generally applicable contract defenses, such 18 as fraud, duress, or unconscionability,’ but not by defenses that apply only to arbitration or that 19 derive their meaning from the fact that an agreement to arbitrate is at issue.” AT&T Mobility LLC v. 20 Concepcion, 563 U.S. 333, 339 (2011) (quoting Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 21 687 (1996)). 22 In deciding whether a valid arbitration agreement exists, the “the party seeking to compel 23 arbitration[] has the burden of proving the existence of an agreement to arbitrate by a 24 preponderance of the evidence.” Knutson v. Sirius XM Radio, Inc., 771 F.3d 559, 565 (9th Cir. 25 2014.) Moreover, “in interpreting arbitration agreements . . . courts ‘should apply ordinary state- 26 law principles that govern the formation of contracts.’” Cape Flattery Ltd. v. Titan Mar., LLC, 647 27 F.3d 914, 920 (9th Cir. 2011) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 28 1 (1995).) Thus, the Court applies California law in interpreting the specific provisions of the 2 contracts at issue here. 3 III. ANALYSIS 4 A. The Existence of an Enforceable Agreement 5 Plaintiffs offer three reasons why the Staffmark agreements are not binding arbitration 6 agreements. The Court addresses each in turn. 7 1. The Existence of a Valid Agreement 8 First, the Staffmark plaintiffs claim they did not sign the Staffmark agreements and that as 9 such, they are entitled to a jury trial on the issue of contract formation. The Court is not convinced. 10 As the First Order noted, evidence that a company’s electronic procedures are crafted such 11 that an electronic signature could only have come from the alleged signatory is sufficient to 12 demonstrate the existence of an agreement. (See First Order at 9-10.) Plaintiffs are thus incorrect in 13 arguing that the: operative question here is not whether Staffmark had a legally cognizable system for 14 eliciting electronic signatures, but rather, whether Plaintiffs were the persons who 15 transmitted the electronic signatures in this instance. (Dkt. No. 57, Plaintiffs’ Opposition to Defendants’ Motion to Compel Arbitration and Dismiss or 16 Stay Proceedings (“Oppo.”) at 6.) Where the former offers strong evidence that the latter must be 17 true, the actual operative question is satisfactorily answered: namely, whether Tesla has shown by a 18 preponderance of the evidence that a binding agreement existed. 19 This is the case here. Tesla offers essentially the same evidence the Court found sufficient in 20 its First Order. Tesla support its motion with copies of the signed agreement and a sworn 21 declaration from Staffmark Chief of People Suzanne Perry (Dkt. No. 54-2, Declaration of Suzanne 22 Perry (“Perry Decl.”).) Perry details how the Staffmark plaintiffs were sent a hyperlink to complete 23 their onboarding process upon hiring before being required to log in using a unique username and 24 password (the latter of which “was not viewable . . . on any . . . Staffmark computer system”). (See 25 generally, Perry Decl. ¶¶ 7-29.) The declaration further relies on IP addresses obtained by third- 26 party vendor Equifax, Inc., as well as computer access history log documentation to confirm that 27 the Staffmark plaintiffs did indeed sign the agreements. As with the First Order, this is sufficient to 28 1 allow the Court to find “that Tesla has demonstrated by a preponderance of the evidence that the 2 signatures are authentic.” (First Order at 10.)2 3 Plaintiffs’ contrary arguments do not persuade. First, plaintiffs’ cases are distinguishable: in 4 one, the employer was unable to identify internal confirmation of the alleged signature, and in 5 another, the plaintiff “disputed the reliability of the employer’s electronic protocols by showing 6 another employee was in a credible position to enter the plaintiff’s signature in the system.” (Oppo. 7 at 5.) Neither barrier to confirming the agreements’ existence is present here. Defendants finally 8 rely on Ruiz v. Moss Bros. Auto Group, Inc., 232 Cal.App.4th 836 (2014), a case this Court 9 distinguished in its First Order on largely identical grounds. (See First Order at 9-10.) 10 Finally, plaintiffs argue that the agreements themselves contain only the Staffmark 11 plaintiffs’ initials, and not full signatures. As defendant notes, part of plaintiffs’ onboarding 12 paperwork included a statement that said: “You will be asked to provide your signature 13 electronically on the required forms and documents by placing your initials in a box where 14 indicated.” (Perry Decl., Ex. E-F.) Plaintiffs place weight on the agreement’s wording, which 15 states: “By initialing the box below, I certify that I have read the above information, and I agree to 16 the conditions of hiring.” (Id., Ex. G.) Plaintiffs argue the initials therefore represent mere 17 acknowledgement of the binding arbitration provisions, but that such terms were not actual 18 “conditions of hiring.” The Court declines to grant this tortured reading of an agreement that is 19 patently clear on its face. 20 2 Plaintiffs assert that “none of the information presented in the Perry Declaration or 21 attached exhibits can support the authenticity of the proffered signatures against the possibility that 22 unknown Staffmark employees inputted the signatures, as Plaintiffs’ denials suggest.” (Oppo. at 6- 7.) The Court, however, finds significance in Perry’s statement that: “No one at Staffmark had 23 access to an applicant's personalized password once the applicant changed the password from the original default password. Only the applicant had access to his or her personalized password.” 24 (Perry Decl. ¶ 16.) Additionally, plaintiffs raise several evidentiary issues with the declaration, 25 arguing in substance that Perry can only speak to how Staffmark systems are designed, but cannot and did not share “personal knowledge that the electronic protocols were, in fact, followed with 26 respect to Plaintiffs.” (Dkt. No. 57-1, Plaintiffs’ objection to evidence at 3.) At this stage, Tesla only needs to show by a preponderance of the evidence that the signatures are authentic, and 27 Perry’s declaration is sufficient to do so. To require personal knowledge that the procedures were 28 followed runs the risk of forcing Tesla to disprove a negative (i.e. to show that no possible unusual occurrence took place), which would impermissibly raise Tesla’s evidentiary burden at this stage. 1 2. Tesla’s status as non-signatory 2 Plaintiffs next argue that even if the agreements exist, they are unenforceable as against 3 Tesla, a non-signatory. The agreement states: This Agreement is also intended to apply to any Employment Claims the Employee 4 may have against the Company’s current or former officers, directors, employees, 5 agents, or customers . . . . (Id.; emphasis supplied.) Plaintiffs argue that Tesla does not qualify as a customer under the 6 agreement, because under state law, “to invoke the third-party beneficiary exception, a non- 7 signatory to an arbitration agreement must show that the arbitration clause of the agreement was 8 made expressly for their benefit.” (Oppo. at 10.) They further argue that the term is placed amidst a 9 list of individuals, and thus in context, “[t]he positioning here of the term “customers” indicates that 10 the term applies to individuals, not entities.” (Id. at 11.) 11 Plaintiffs ask the Court to read the contract in illogical ways. Staffmark is “a temporary 12 services agency” whose entire business model is “plac[ing] temporary employees at worksites of its 13 customers.” (Perry Decl. ¶ 6.) In the context of a Staffmark-drafted agreement, the word 14 “customer” most logically refers to the companies with whom Staffmark contracts, and in the 15 context of an agreement to arbitrate employment-related disputes, the inference that the word 16 would mean anything else nearly strains credulity. The Court will not depart from its obligation 17 under state law to ensure that the “words of a contract are to be understood in their ordinary and 18 popular sense.” Cal. Civ. Code § 1644.3 19 3. Unconscionability 20 Finally, plaintiffs assert that the agreements are unenforceable as unconscionable. As with 21 the agreements considered in the First Order, plaintiffs argue the Staffmark agreements are 22 “permeated with unconscionability, which cannot be ameliorated through severance and thus, 23 cannot be enforced.” (Oppo. at 13.) The Court does not find the agreement is so riddled with 24 unconscionable terms as to render the entire agreement unenforceable. Nor is plaintiffs’ argument 25 about severance convincing. Plaintiffs argue that severing any unconscionable terms would 26 27

28 3 Because the Court finds that the Staffmark agreements facially bind plaintiffs and Tesla, it does not consider the additional equitable estoppel arguments. 1 || “function to condone an illegal scheme.” (Oppo. at 14 (quoting Ramirez v. Charter Commc’ns, Inc., 2 2024 WL 3405593, at *19 (Cal. July 15, 2024).) As defendants note, the provision animating this 3 || contention waives signatories’ right to appeal, not to wholesale judicial review. 4 Thus, the Court does not find the Staffmark agreements unenforceable as unconscionable. 5 B. Waiver of Class Claims 6 Plaintiffs finally argue that the agreement does not mandate the dismissal of the Staffmark 7 || plaintiffs’ class claims. Citing the agreement’s text, plaintiffs assert that the agreement “merely 8 || addresses what happens in arbitration, not what happens in Court.” (Oppo. at 18 (emphasis in 9 || original).) Because the agreement references arbitration, but makes no explicit reference to a court, 10 || plaintiffs argue that the “agreements do not contain any requirement that claims must be 11 || adjudicated only on an individual basis in the judicial forum, and they do not contain any waiver of 12 || class actions in the judicial forum.” (Id. at 17 (emphasis in original).) E 13 Section 2.4 of the agreement, which plaintiffs cite in their opposition, states that “that no a 14 || form of class, collective, or representative action shall be maintained without the mutual consent of 8 15 || the parties.” (Perry Decl., Ex. G.) Permitting class claims to proceed would thus violate the direct Z 16 || text of this section, as those would be, by definition, “a form of class, collective, or representative 17 || action.” Ud. (emphasis added).) 18 The Court overrules the objection to dismissal of the Staffmark plaintiffs’ class claims. 19 IV. CONCLUSION 20 For the reasons set forth above, the Court GRANTS defendants’ motion to compel arbitration 21 || with regard to plaintiffs Shontae Stephens and Sienna Stephens’ claims, dismiss plaintiffs Shontae 22 || Stephens and Sienna Stephens’ class claims, and stay the non-individual PAGA claims. 23 This terminates Docket No. 54. 24 IT Is SO ORDERED. 25 Date: August 1, 2024 __ Dopone Higptfflees, ONNE GONZALEZ ROGERS 26 UNITED STATES DISTRICT COURT JUDGE 27 28