Bouskos v. JP Morgan Chase Bank, N.A.

Opinion

MICHAEL BOUSKOS, individually and No. 1:19-cv-01431-DAD-SAB behalf of others similarly situated, Plaintiff, ORDER GRANTING MOTION TO COMPEL v. ARBITRATION AND STAYING THE PROCEEDINGS PENDING ARBITRATION J.P. MORGAN CHASE BANK, N.A., (Doc. No. 11) Defendant.

This matter is before the court on defendant J.P. Morgan Chase Bank, N.A.’s motion to compel arbitration. (Doc. No. 11.) Pursuant to Local Rule 230(g), on April 20, 2020, the court took this matter under submission to be decided on the papers without a hearing. For the reasons set forth below, defendant’s motion to compel arbitration is granted and the proceedings are stayed pending arbitration. Plaintiff Michael Bouskos was employed by defendant as a home lending advisor to provide direct lending services to homebuyers. (Doc. No. 1-1 at 7–8.) In this proposed class ///// ///// ///// action, plaintiff asserts five claims1 alleging defendant committed various violations of wage and hour employment law established by California Labor Code and Industrial Welfare Commission (“IWC”) Wage Orders and one claim alleging that defendant violated California’s unfair competition law, California Business & Professions Code §§ 17200, et seq. (Id.) On March 11, 2020, defendant moved to compel arbitration of plaintiff’s individual claims, relying on the arbitration agreement and class action waiver provision which appear in the employment agreement plaintiff signed with defendant. (Doc. No. 11-3 at 12–17.) On March 31, 2020, plaintiff filed his opposition to the pending motion, and on April 14, 2020, defendant filed a reply. (Doc. Nos. 12, 13.) The Federal Arbitration Act (“FAA”) provides that any written agreement containing a clause to settle a dispute through arbitration is to be considered “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract” and confers the right to obtain an order requiring arbitration proceed in the manner provided for in the contract. 9 U.S.C. §§ 2, 4; Epic Sys. Corp. v. Lewis, __U.S.__, 138 S. Ct. 1612, 1621 (2018) (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)). The FAA nevertheless requires a court deciding a motion to compel arbitration to determine two threshold issues: (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. Boardman v. Pacific Seafood Grp., 822 F.3d 1011, 1017 (9th Cir. 2016) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). If a valid arbitration agreement that encompasses the dispute at issue is found to exist, arbitration is mandatory. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002). 1 Specifically plaintiff alleges (1) failure to pay wages in violation of California Labor Code §§ 510, 1194, 1194.2, 1197, and 1198 and IWC Wage Order §§ 3 and 5; (2) failure to provide meal periods in violation of California Labor Code §§ 226.7 and 512 and IWC Wage Order § 11; (3) failure to permit rest breaks in violation of California Labor Code § 226.7 and IWC Wage Order § 12; (4) failure to provide accurate itemized wage statements in violation of California Labor Code § 226; (5) failure to pay all wages due upon separation of employment in violation of California Labor Code §§ 201–203. (See Doc. No. 1-1.) Here, defendant contends that the court must compel arbitration of plaintiff’s employment-related claims on an individual basis because plaintiff signed an employment agreement which contains both an arbitration agreement and a class action waiver provision. (Doc. No. 11-1 at 4–7.) Defendant further requests that the court dismiss this action or stay the proceedings pending arbitration. (Id. at 11–12.) Plaintiff opposes the pending motion on the grounds that he believes the class action waiver provision exempts class actions from the arbitration requirement by its terms. (Doc. No. 12 at 1–2, 4.) A. Validity of the Arbitration Agreement at Issue 1. The Relevant Sections of the Arbitration Agreement The relevant sections of the arbitration agreement are included here:

JPMorgan Chase believes that if a dispute related to an employee’s or former employee’s employment arises, it is in the best interests of both the individual and JPMorgan Chase to resolve the dispute without litigation. Most employment disputes are resolved internally through the Firm’s Open Communication Policy. When such disputes are not resolved internally, JPMorgan Chase provides for their resolution by binding arbitration as described in this Binding Arbitration Agreement (“Agreement”). By signing this Agreement you acknowledge that you waive your right to bring claims in court or to resolve them before a jury. “JPMorgan Chase” and the “Firm” as used in this Agreement mean JPMorgan Chase & Co. and all of its direct and indirect subsidiaries. This Agreement will be governed by the Federal Arbitration Act (“FAA”), 9 U.S.C. ? 1 [sic] et seq.

As a condition of and in consideration of my employment with JPMorgan Chase & Co. or any of its direct or indirect subsidiaries, I agree with JPMorgan Chase as follows:

1. SCOPE: Any and all “Covered Claims” (as defined below) between me and JPMorgan Chase (collectively “Covered Parties” or “Parties”, individually each a “Covered Party” or “Party”) shall be submitted to and resolved by final and binding arbitration in accordance with this Agreement. 2. COVERED CLAIMS: “Covered Claims” include all legally protected employment-related claims, excluding those set forth below in Paragraphs 3 and 4 of this Agreement, that I now have or in the future may have against JPMorgan Chase or its officers, directors, shareholders, employees or agents which arise out of or relate to my employment or separation from employment with JPMorgan Chase and all legally protected employment-related claims that JPMorgan Chase has or in the future may have against me, including, but not limited to, claims of employment discrimination or harassment if protected by applicable federal, state or local law, and retaliation for raising discrimination or harassment claims, failure to pay wages, bonuses or other compensation, tortious acts, wrongful, retaliatory and/or constructive discharge, breach of an express or implied contract, promissory estoppel, unjust enrichment, and violations of any other common law, federal, state, or local statute, ordinance, regulation or public policy, including, but not limited to Title VII of the Civil Rights Act of 1964, the Civil Rights Acts of 1866 and 1991, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act of 1990, the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act of 1938, the Equal Pay Act of 1963, Section 1981 of the Civil Rights Act, and the Worker Adjustment and Retraining Notification Act. . . .

4. CLASS ACTION/COLLECTIVE ACTION WAIVER: All Covered Claims under this Agreement must be submitted on an individual basis. No claims may be arbitrated on a class or collective basis unless required by applicable law. Covered Parties expressly waive any right with respect to any Covered Claims to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, collective action, or other representative or joint action, regardless of whether the action is filed in arbitration or in court. Furthermore, if a court orders that a class, collective, or other representative or joint action should proceed, in no event will such action proceed in the arbitration forum, subject to applicable law. Claims may not be joined or consolidated in arbitration with disputes brought by other individual(s), unless agreed to in writing by all parties or required by applicable law. To the extent there is a question of enforceability of class or collective arbitration, it shall be decided only by a court, not an arbitrator. The arbitrator’s authority to resolve disputes and make awards under this Agreement is limited to disputes between: (i) an individual and JPMorgan Chase; and (ii) the individual and any current or former officers, directors, employees and agents, if such individual is sued for conduct within the scope of their employment. No arbitration award or decision will have any preclusive effect as to issues or claims in any dispute with anyone who is not a named party to the arbitration. I retain the right to challenge the validity of this Agreement upon grounds that may exist at law or equity and will not be subject to any form of retaliation for asserting such rights. (Doc. No. 11-3 at 12–13.) 2. The Parties Do Not Dispute that a Valid Agreement Exists The court must first determine if a valid arbitration agreement exists. Howsam, 537 U.S. at 84. Plaintiff does not challenge the validity of the arbitration agreement on any contract formation grounds. (See generally Doc. No. 12.) Defendant asserts that plaintiff’s employment was contingent upon his acceptance of the terms of the arbitration agreement. (Doc. No. 11-1 at 2–3.) Neither party disputes that plaintiff signed the document containing the arbitration agreement, nor do they dispute that plaintiff was employed by defendant for a period of time. (Doc. Nos. 11-1 at 2; 11-3 at 17.) “[T]he party opposing arbitration bears the burden of proving any defense . . ..” Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1260 (9th Cir. 2017) (quoting Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 236 (2012)). Plaintiff has not attempted to meet that burden with respect to the validity of the arbitration agreement at issue here. Accordingly, the court finds that the signed arbitration agreement contained in plaintiff’s offer letter was validly formed.2 B. Whether the Arbitration Agreement Covers This Dispute The dispute between the parties here is whether the arbitration agreement covers the alleged claims. 1. “Covered Claims” as Defined in the Arbitration Agreement Plaintiff alleges claims for (1) failure to pay wages, (2) failure to provide meal periods, (3) failure to permit rest breaks, (4) failure to provide accurate itemized wage statements, (5) failure to pay all wages due upon separation of employment, and (6) violation of California’s Unfair Competition Law. (See Doc. No. 1-1.) These claims are either specifically delineated in the arbitration agreement (e.g., “failure to pay wages”) or are otherwise encompassed by the definition of “Covered Claims” as “all legally protected employment-related claims . . . which arise out of or relate to my employment . . . and violations of any other common law, federal, state, or local statute, ordinance, regulation or public policy . . ..” (Doc. No. 11-3 at 12.) Plaintiff does not dispute that his claims are of the type that the arbitration agreement covers. (See generally Doc. No. 12.) Thus, the court finds that plaintiff’s alleged claims are of the type subject to the parties’ arbitration requirement. /////

2 The court’s finding in this instance is not to be construed as a validation of the entire arbitration agreement in other contexts not at issue here. Indeed, as defendant notes, the section of the agreement which prohibits representative actions, such as those brought under California’s Private Attorney General Act (“PAGA”), would not be enforceable under controlling Ninth Circuit law. (Doc. No. 11-1 at 8 n.2) (“Defendant acknowledges that the currently controlling case law, Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 440 (9th Cir. 2015), precludes them presently from enforcing the representative action waiver in the BAA should Plaintiff amend his Complaint to assert a representative action claim.”). 2. Enforceability of the “Class Action/Collective Action Waiver” The arbitration agreement contains a provision entitled “Class Action/Collective Action Waiver.” (Doc. No. 11-3 at 13.) Defendant describes this as a class action waiver, waiving plaintiff’s right to bring his claims on behalf of a class. (Doc. Nos. 11-1 at 8–9; 13 at 2–4.) Plaintiff argues that because the language of the provision states that class claims cannot proceed in arbitration, this provision instead functions as an exception to the arbitration requirement for “Covered Claims,” enabling his class claims to proceed before this court because the parties did not agree to arbitrate class claims. (Doc. No. 12.) By its terms, the arbitration agreement requires this court to determine the enforceability of the “Class Action/Collective Action Waiver” provision in the event of a dispute. (Doc. No. 11- 3 at 13) (“To the extent there is a question of enforceability of class or collective arbitration, it shall be decided only by a court, not an arbitrator.”) In doing so here, the court does not find plaintiff’s interpretation of the provision to be plausible. The court instead finds that the “Class Action/Collective Action Waiver” provision, read together with the definition of “Covered Claims” and the severability clause, does not exclude plaintiff’s claims from the arbitration requirement, it simply prohibits one from bringing “Covered Claims” on behalf of a class in arbitration. (See Doc. No. 11-3 at 13, 16.) The court must read this provision on its own as well as in context, giving preference to a reasonable interpretation which enables the document to make sense as a whole. See United States v. Westlands Water Dist., 134 F. Supp. 2d 1111, 1135 (E.D. Cal. 2001) (“A written contract must be read as a whole and every part interpreted with reference to the whole, with preference given to reasonable interpretations.”). Here, plaintiff asks the court to find that class actions are categorically excluded from the arbitration requirement because he asserts “Covered Claims” do not include claims in Paragraph 4 and the class action waiver language appears in Paragraph 4. (Doc. No. 12 at 1–2, 5.) However, the definition of “Covered Claims” states that “‘Covered Claims’ include all legally protected employment-related claims, excluding those set forth below in Paragraphs 3 and 4 of this Agreement, that I now have or in the future may have against JPMorgan Chase . . ..” (Doc. No. 11-3 at 12) (emphasis added). A clearly more reasonable reading of that language is that it provides that only those specific claims listed as exclusions in Paragraphs 3 and 4 are excluded from the arbitration requirement, not the entirety of Paragraphs 3 and 4. This is because the agreement says “excluding those set forth in Paragraphs 3 and 4 below”—with “those” referring to “Covered Claims”—rather than stating more broadly, “excluding Paragraphs 3 and 4 below,” language that would exempt the entire paragraphs. If the agreement meant for class actions to be excluded categorically, it presumably would have included the “Class Action/Collective Action Waiver” provision in the list of “Excluded Claims” in Paragraph 3. (Id. at 12–13.) Instead, the “Class Action/Collective Action Waiver” provision waives the right to bring claims on a class basis against defendant other than for the limited exception listed, which is what the definition of “Covered Claims” references. (Id. at 13, 16.) The arbitration agreement permits an employee to bring class claims outside of arbitration if a court finds class treatment is required by law. (Id. at 16.) (“If for any reason the class, collective, or representative or joint action waiver is found to be unenforceable, the class, collective, or representative or joint action may only be heard in court and may not be arbitrated under this Agreement[.]”) Plaintiff does not argue any reason that his claims presented in this action must proceed as a class as a matter of law, and the Supreme Court has held that such class action waivers are enforceable. Epic Sys. Corp., 138 S. Ct. at 1622–23. Because plaintiff’s claims are “Covered Claims” pursuant to the parties’ arbitration agreement and because the parties’ class action waiver is enforceable, the court is required by the FAA to order plaintiff pursue his claims on an individual basis in arbitration. C. The Request for Dismissal or Stay of the Proceedings Pending Arbitration The court finds that a stay of this action pending the resolution of arbitration is required by the FAA because all of plaintiff’s claims are subject to arbitration. 9 U.S.C. § 3. “A district court ‘has the discretion to either stay the case pending arbitration or to dismiss the case if all of the alleged claims are subject to arbitration.’” Ortiz v. Hobby Lobby Stores, Inc., 52 F. Supp. 3d 1070, 1089 (E.D. Cal. 2014) (quoting Delgadillo v. James McKaone Enters., Inc., No. 1:12-cv- ///// 1149, 2012 WL 4027019, at *3 (E.D. Cal. Sept. 12, 2012)). Here, the court declines to exercise its discretion to dismiss the action. Accordingly, the court proceedings are stayed pending the resolution of the arbitration. For the reasons set forth above: 1. Defendant’s motion to compel arbitration on an individual basis (Doc. No. 11) is granted; 2. This action is stayed pending the resolution of the arbitration and shall be administratively closed; 3. The parties are ordered to file a joint status report every 90 days as to the status of the arbitration proceedings until such proceedings have been completed; and 4. The parties are ordered to notify the court within 30 days from the date that the arbitration has been completed so that the action may terminated when appropriate. IT IS SO ORDERED. si □ '6 Dated: _ December 18, 2020 Y L ah yt UNITED STATES DISTRICT JUDGE