Elias Perez v. PeopleReady, Inc., et al.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ELIAS PEREZ, Case No. 25-cv-04610-AMO

8 Plaintiff, ORDER GRANTING MOTION TO 9 v. COMPEL ARBITRATION

10 PEOPLEREADY, INC., et al., Re: Dkt. Nos. 18, 19 Defendants. 11

12 13 Plaintiff Elias Perez sues against Defendants PeopleReady, Inc. (“PeopleReady”) and 14 Global Fixture Services, Inc. (“Global Fixture”) on behalf of a putative class of employees and 15 under California’s Private Attorneys General Act (“PAGA”). PeopleReady’s motion to compel 16 arbitration, joined by Global Fixture, is fully briefed and suitable for decision without oral 17 argument. Accordingly, the hearing set for March 12, 2026, is VACATED. See Civil L.R. 7-6, 18 Fed. R. Civ. Pro. 78(b). Having read the parties’ papers and carefully considered their arguments 19 and the relevant legal authority, the Court GRANTS the motion to compel arbitration for the 20 following reasons. 21 I. BACKGROUND 22 PeopleReady, Inc. (“PeopleReady”) is a staffing company specializing in providing 23 temporary workers (“Temporary Associates”) to businesses in need of temporary employees. 24 Vargas Decl. (Dkt. No. 18-3) ¶ 3. PeopleReady provides temporary workers to its customers 25 throughout California. Id. ¶ 3. Global Fixture is a PeopleReady customer. Id. ¶ 4. PeopleReady 26 assigned Perez to work at Global Fixture on a temporary basis. Id. ¶ 5. 27 On September 7, 2023, as part of his onboarding to work for PeopleReady as a Temporary 1 employment with PeopleReady, as well as its “parent company” and “any customer for whom” 2 Plaintiff performed work. Vargas Decl. ¶ 6, Ex. A (“arbitration agreement”).1 3 On March 4, 2025, Perez filed a class action complaint against Defendants, asserting eight 4 causes of action. After serving Defendants, Perez filed the operative first amended class and 5 representative action complaint. See Dkt. No. 1-2 at 5-26 (“FAC”). Perez asserts the following 6 claims for relief: (1) failure to provide meal periods, (2) failure to provide rest periods, (3) failure 7 to pay all wages, (4) knowing and intentional failure to comply with itemized employee wage 8 statement provisions, (5) failure to timely pay wages due at termination, (6) failure to timely pay 9 employees, (7) failure to reimburse business expenses, (8) failure to pay for all hours worked, 10 including overtime hours, (9) violation of Business and Professions Code § 17200, and 11 (10) penalties pursuant to California Labor Code section 2699(f). Id. Perez generally alleges the 12 existence of a joint employment relationship between PeopleReady and Global Fixture, including 13 as “joint employers.” FAC ¶ 18. 14 II. DISCUSSION 15 PeopleReady moves to compel Perez’s claims to arbitration and stay the case. Dkt. No. 18. 16 Global Fixture joins PeopleReady’s motion. Dkt. No. 19. The Federal Arbitration Act (“FAA”) 17 provides that written arbitration agreements in contracts “evidencing a transaction involving 18 commerce . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law 19 or in equity for the revocation of any contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 20 339 (2011) (quoting 9 U.S.C. § 2). The FAA reflects a “liberal federal policy favoring arbitration 21 agreements.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (quoting Moses H. 22 Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983)). The FAA 23 “mandates that district courts shall direct the parties to proceed to arbitration on issues as to which 24 an arbitration agreement has been signed.” Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 25 (1985). However, “arbitration is a matter of contract and a party cannot be required to submit to 26 arbitration any dispute which he has not agreed so to submit.” Howsam v. Dean Witter Reynolds, 27 1 537 U.S. 79, 83 (2002). Where a valid agreement to arbitrate exists and encompasses the dispute 2 at issue, “then the [FAA] requires the court to enforce the arbitration agreement in accordance 3 with its terms.” Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 4 2000) (internal citations omitted). 5 District courts apply the summary judgment standard of Federal Rule of Civil Procedure 6 56 in resolving motions to compel arbitration. Hansen v. LMB Mortg. Servs., Inc., 1 F.4th 667, 7 670 (9th Cir. 2021). Further, when evaluating whether a party is bound by an arbitration 8 agreement, federal courts “ ‘apply ordinary state-law principles that govern the formation of 9 contracts’ to decide whether an agreement to arbitrate exists.” Norcia v. Samsung Telecomms. 10 Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (quoting First Options of Chi. Inc. v. Kaplan, 514 11 U.S. 938, 944 (1995)); see also Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 12 2002) (noting that although the FAA preempts state laws that are only applicable to arbitration 13 agreements, general contract principles and defenses “grounded in state contract law, may operate 14 to invalidate arbitration agreements”) (citing Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 15 687 (1996)). To form a contract under California law, there must be “actual or constructive notice 16 of the agreement” and a “manifest[ation of] mutual assent.” Oberstein v. Live Nation Ent., Inc., 60 17 F.4th 505, 512-13 (9th Cir. 2023). If the foundational elements are satisfied, the agreement shall 18 be enforced so long as it is fair and conscionable. The plaintiff bears the burden of showing that 19 an arbitration agreement is unconscionable. Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1260 20 (9th Cir. 2017); Engalla v. Permanente Med. Grp., Inc., 15 Cal. 4th 951, 972 (1997) (“a party 21 opposing the petition [to compel arbitration] bears the burden of proving by a preponderance of 22 the evidence any fact necessary to its defense”). 23 Perez does not dispute that he signed the arbitration agreement, nor does he dispute that his 24 claims are encompassed within the scope of the arbitration agreement. Instead, Perez argues that 25 the arbitration agreement is unconscionable and, therefore, unenforceable. See generally Dkt. No. 26 20 (Perez’s opposition brief). “It is well-established that unconscionability is a generally 27 applicable contract defense, which may render an arbitration provision unenforceable.” 1 may refuse to enforce a provision when it is procedurally and substantively unconscionable. Id. at 2 1280. Although both forms of unconscionability must be present, “they need not be present in the 3 same degree.” Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 910 (2015) (citation 4 omitted). The two forms of unconscionability operate on a “sliding scale.” Armendariz v. 5 Foundation Health Psychcare Services, Inc., 24 Cal. 4th 83, 114 (2000). “[T]he more 6 substantively oppressive a contract term, the less procedurally unconscionable it must be to be 7 deemed unenforceable, and vice versa.” Id. at 114. The party opposing arbitration bears the 8 burden to show both procedural and substantive unconscionability. Pinnacle Museum Tower 9 Ass’n v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 247 (2012); Armendariz, 24 Cal. 4th at 10 114. 11 The Court first determines whether Perez has established procedural unconscionability 12 before considering whether he has shown substantive unconscionability. 13 A. Procedural Unconscionability 14 Procedural unconscionability exists where there is “oppression or surprise due to unequal 15 bargaining power.” Lim v. TForce Logistics, LLC, 8 F.4th 992, 1000 (9th Cir. 2021) (quoting 16 Pinnacle Museum Tower Ass’n v. Pinnacle Mkt Dev., LLC, 55 Cal. 4th 223, 236 (2012)). 17 “Oppression” concerns “an inequality of bargaining power that results in no real negotiation and 18 an absence of meaningful choice.” Lim, 8 F.4th at 1000 (quoting Poublon, 846 F.3d at 1260). 19 California law provides that oppression may be established by showing that an agreement was a 20 contract of adhesion, Lim, 8 F.4th at 923, which is a contract “imposed and drafted by the party of 21 superior bargaining strength, relegat[ing] to the subscribing party only the opportunity to adhere to 22 the contract or reject it,” Poublon, 846 F.3d at 1260 (quoting Armendariz, 24 Cal. 4th at 113); see 23 also OTO, LLC v. Kho, 8 Cal. 5th 111, 126 (2019) (“An adhesive contract is standardized, 24 generally on a preprinted form, and offered by the party with superior bargaining power on a take- 25 it-or-leave-it basis.” (quotation marks and citations omitted)). “Ordinary contracts of adhesion, 26 although they are indispensable facts of modern life that are generally enforced, contain a degree 27 of procedural unconscionability even without any notable surprises, and bear within them the clear 1 danger of oppression and overreaching.” Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1244 2 (2016) (quotation marks and citation omitted). 3 Perez asserts that the arbitration agreement is a contract of adhesion imposed as a condition 4 of employment. Dkt. No. 20 at 6-7. PeopleReady does not dispute that the arbitration agreement 5 is a contract of adhesion but argues there is no other evidence of oppression or surprise. See Dkt. 6 No. 22 at 4-5. “If the contract is adhesive, the court must then determine whether other factors are 7 present which, under established legal rules – legislative or judicial – operate to render it 8 [unenforceable].” Armendariz, 24 Cal. 4th at 113 (alteration in original) (quotations and citation 9 omitted). Such factors that may establish oppression include:

10 (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to 11 sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the 12 education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney. 13 14 OTO, 8 Cal. 5th at 126-27 (citation omitted). California courts have consistently held that the fact 15 that an arbitration agreement is an adhesion contract does not render it automatically 16 unenforceable as unconscionable. See, e.g., Sanchez v. Carmax Auto Superstores Calif., LLC, 224 17 Cal. App. 4th 398, 402 (2014) (“[T]hat the agreement is required does not make it unenforceable, 18 absent other factors.”); Lagatree v. Luce, Forward, Hamilton & Scripps, 74 Cal. App. 4th 1105, 19 1127 (1999) (“[T]he cases uniformly agree that a compulsory predispute arbitration agreement is 20 not rendered unenforceable just because it is required as a condition of employment or offered on 21 a ‘take it or leave it’ basis.”). In fact, where the arbitration provisions presented in a contract of 22 adhesion are highlighted for an employee, any procedural unconscionability is “limited.” Serafin 23 v. Balco Props. Ltd., LLC, 235 Cal. App. 4th 165, 179 (2015). 24 Here, Perez advances that the arbitration agreement was procedurally unconscionable 25 based on (1) the arbitration agreement being presented to him as a condition of employment in a 26 small room and along with several other documents, and (2) the fact that the JAMS arbitration 27 rules were not physically attached. The Court takes up these arguments in turn. 1 On the first issue, Plaintiff contends that the arbitration agreement is procedurally 2 unconscionable because he believed that failure to sign would result in not being hired, because a 3 PeopleReady representative remained in the same “small room” with him while he reviewed the 4 paperwork, “creating an atmosphere of pressure and intimidation,” and because he did not believe 5 that any part of the onboarding paperwork was negotiable. Dkt. No. 20 at 7 (citing Perez Decl., 6 Dkt. No. 20-1). As an initial matter, the plain language of the arbitration agreement itself confirms 7 it is not mandatory:

8 Arbitration is Voluntary. I understand that arbitration is not a mandatory condition of my employment with the Company and my 9 decision to sign or not sign this Agreement is entirely voluntary. . . . I further understand that if I do not sign this Agreement, I will not be 10 subject to any adverse employment action as a consequence of that decision. 11 12 See Vargas Decl., Ex. A § 2 (Dkt. No. 18-2 at 5). The arbitration agreement was therefore not 13 adhesive because it was plainly voluntary, mitigating any claimed oppression on the part of 14 PeopleReady. Moreover, Perez’s belief that he would not be hired if he did not sign the arbitration 15 agreement does not establish procedural unconscionability. See Lagatree, 74 Cal. App. 4th at 16 1127. 17 Perez’s contentions regarding the physical conditions to which he was subjected during his 18 execution of onboarding documents present a different issue. In Baltazar v. Forever 21, Inc., the 19 California Supreme Court enforced an arbitration agreement offered on a “take-it-or-leave-it” 20 basis, explaining that the adhesive nature of an employment arbitration agreement does not itself 21 render it unconscionable; there must also be “oppression” or “sharp practices,” such as the 22 employee being “lied to, placed under duress, or otherwise manipulated into signing the arbitration 23 agreement.” Id., 62 Cal. 4th at 1245. Perez describes that a PeopleReady representative remained 24 in the same small room with him while he reviewed the paperwork, creating an atmosphere of 25 pressure and intimidation and implicating the “oppression” or “sharp practices” noted in Baltazar. 26 See Perez Decl. (Dkt. No. 20-1) ¶ 5. PeopleReady responds that Perez’s “subjective 27 understanding, feelings, and fears are not reasonable” and thus should not factor into the analysis 1 declaration describing the accommodations made for Perez related to the review and execution of 2 onboarding paperwork, including that Perez had the opportunity to execute the documents online 3 from a different location and that the room in which Perez executed his onboarding paperwork is a 4 40-by-20 foot open room which includes the area where applicants can review and sign 5 onboarding paperwork at their leisure while seated at private desks. See Tamariz Decl. (Dkt. No. 6 22-1) ¶¶ 3-8. While this countervailing evidence creates a dispute of fact, the Court need not 7 resolve it because Perez does not claim that anyone misrepresented the arbitration agreement, 8 refused to let him read it, or denied him the ability to ask questions or take additional time to 9 review the agreement. The facts here thus do not resemble the “sharp practices” of oppression 10 noted in Baltazar. Given that Perez fails to establish that the arbitration agreement that 11 PeopleReady utilized sharp practices to obtain his assent, he falls well short of the oppression 12 necessary to establish procedural unconscionability. 13 The second issue of procedural unconscionability asserted by Perez is that the arbitration 14 agreement incorporates JAMS Employment Arbitration Rules & Procedures but does not attach 15 them. Dkt. No. 20 at 7. In Baltazar, the California Supreme Court held that the failure to attach 16 arbitration rules “without more” does not alter the unconscionability analysis. Id., 62 Cal. 4th at 17 1246. The California Court of Appeal similarly held that the failure to attach an arbitration 18 service’s rules did not render an agreement procedurally unconscionable because the rules were 19 “easily accessible” on the Internet. Lane v. Francis Capital Management, LLC, 224 Cal. App. 4th 20 676, 691-92 (2014). The California Supreme Court and Court of Appeal have thus rejected the 21 purported failure to attach an arbitration service’s rules to an arbitration agreement as a standalone 22 basis for unconscionability where the rules are readily available and the employee is told how to 23 access them. The arbitration agreement at bar accomplishes this and goes further – it not only 24 identifies JAMS as the arbitration service, it provides a direct URL to the JAMS employment rules 25 and states that “[a] copy of such rules can also be provided upon request from human resources.” 26 Vargas Decl., Ex. A § 2 (Dkt. No. 18-2 at 6). Perez submits no evidence that he ever requested the 27 rules or that any such request was refused. Under Baltazar and Lane, the absence of a hard-copy 1 Perez fails to establish oppression or surprise that would render the arbitration agreement 2 procedurally unconscionable. The Court thus turns to consider whether Perez demonstrates a 3 sufficiently high degree of substantive unconscionability to render the agreement unenforceable. 4 B. Substantive Unconscionability 5 Substantive unconscionability exists where terms are “overly harsh,” “unduly oppressive,” 6 “unreasonably favorable,” or “shock the conscience.” Poublon, 846 F.3d at 1261 (citing Sanchez 7 v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 910-11 (2015)). “Not all one-sided contract 8 provisions are unconscionable.” Sanchez, 61 Cal. 4th at 911. Substantive unconscionability exists 9 where terms are “unreasonably favorable to the more powerful party,” not simply an “old- 10 fashioned bad bargain.” Baltazar, 62 Cal. 4th at 1244 (citation omitted). Said another way, a 11 contract term is not substantively unconscionable when it merely gives one side a greater benefit; 12 rather the term must be so one-sided as to shock the conscience. Pinnacle Museum Tower Ass’n, 13 55 Cal. 4th at 246. 14 Perez brings two arguments to support his claim that the arbitration agreement is 15 substantively unconscionable: (1) the agreement’s scope is overbroad and extends beyond 16 employment; and (2) the agreement is non-mutual because affiliated entities and others can 17 enforce it against him, but not vice versa. The Court addresses these arguments in turn. 18 1. Scope of Arbitration Agreement 19 Perez focuses on the language that “any claim or dispute between the Parties that may be 20 subject to arbitration including, but not limited to any claim arising out of or relating to this 21 Agreement or breach of this Agreement, my employment, application for employment, and/or 22 termination of employment, or any other matter, shall be submitted to and resolved by binding 23 individual arbitration[.]” Dkt. No. 20 at 8 (citing arbitration agreement). He argues that the 24 provisions “any claim or dispute” as well as “or any other matter” makes the provision overbroad 25 and therefore impermissible based on the California Court of Appeal’s decision in Cook v. 26 University of Southern California, 102 Cal. App. 5th 312 (2024). In that case, the court found 27 unconscionable a clause that required the plaintiff to arbitrate “any and all claims” she might have 1 practice plans, or its or their officers, trustees, administrators, employees or agents, in their 2 capacity as such or otherwise.” Id. at 326. The agreement at issue there, conversely, did not 3 require the related entities to arbitrate their claims against the plaintiff. Id. 4 In response to Perez’s reliance on Cook, PeopleReady cites several cases in which 5 subsequent courts have rejected employment plaintiffs’ efforts to rely on the overbreadth analysis 6 from Cook. See Dkt. No. 22 at 6-8 (citing Johnston v. Sensei AG Holdings, Inc., No. B334773, 7 2025 WL 703258, at *6 (Cal. Ct. App. Mar. 5, 2025) (unpublished); Tanner v. Tax Servs. of Am., 8 Inc., No. 25-CV-01940-DMR, 2025 WL 1580737, at *6 (N.D. Cal. June 4, 2025); Abrahamyan v. 9 Citibank N.A., No. CV 24-01106-MWF (EX), 2025 WL 1720192, at *4 (C.D. Cal. June 9, 2025); 10 Burkhardt v. Extra Space Mgmt., Inc., No. 2:25-CV-00547-DJC-CKD, 2025 WL 2172287, at *6 11 (E.D. Cal. July 31, 2025)). In each of those cases, the courts distinguished the arbitration 12 provision at issue in Cook, which plainly required the plaintiff to arbitrate claims unrelated to her 13 employment, from the arbitration provisions before them, which limited arbitrability to claims 14 arising from the employment relationship. Id. The same distinction exists here. The scope of the 15 arbitration agreement in this case is limited by its first sentence, providing that the parties

16 agree that any claim or dispute between the parties that may be subject to arbitration including, but not limited to any claim arising 17 out of or relating to this Agreement or breach of this Agreement, [Perez’s] employment, application for employment, and/or 18 termination of employment, or any other matter, shall be submitted to and resolved by binding individual arbitration under the [FAA]. 19 20 Dkt. No. 18-2 at 5. The scope of the arbitration agreement is tethered to any arbitrable claim or 21 dispute between the parties arising out of Perez’s employment or termination from employment or 22 relating to the arbitration agreement itself. Id. Read in context, the terms “any claim” and “or any 23 other matter” serve as catch-all terms for other employment-related disputes “between the Parties” 24 – not an obligation to arbitrate every claim possible between Perez and PeopleReady. Id. The 25 arbitration agreement does not contain the “irrespective of whether [claims] arise from the 26 employment relationship” language that drove the result in Cook. Id., 102 Cal. App. 5th at 316, 27 321, 326. Therefore, Perez fails to establish that the scope of the arbitration agreement contributes 1 2. Mutuality of Arbitration Agreement 2 Pressing further on substantive unconscionability, Perez argues that the arbitration 3 agreement lacks mutuality because it requires him to arbitrate claims against PeopleReady’s 4 “parent company, subsidiaries, and related companies, and all of their respective employees, 5 agents, offices, directors, shareholders, successors, and assigns,” while those entities are not 6 obligated to arbitrate claims against him. Dkt. No. 20 at 8. Perez again relies on Cook to argue 7 that this provision renders the arbitration agreement unenforceable. Id. at 8-9. 8 Perez’s reliance on Cook on this front is misplaced. The agreement at issue in Cook 9 required the plaintiff to arbitrate all claims she might have against the defendant university as well 10 as an expansive class of non-signatories, allowing them to enforce the arbitration agreement with 11 relative ease compared to the one-sided, burdensome path to enforcement set for the plaintiff. Id., 12 102 Cal. App. 5th at 326-28. The arbitration agreement here instead provides that either party 13 may compel a claim to arbitration – the arbitration agreement provides that “The Company and I 14 (together, the ‘Parties’) agree that any claim or dispute between the Parties . . . shall be submitted 15 to and resolved by binding individual arbitration.” Dkt. No. 18-2 at 5. The third-party-beneficiary 16 language in the arbitration agreement is thus framed in terms of who may benefit from and enforce 17 the arbitration agreement as part of the parties’ employment relationship, not in terms of forcing 18 Plaintiff to arbitrate every conceivable claim “against” a broad universe of non-signatories. Cf. 19 Cook, 102 Cal. App. 5th at 326-28. Mutuality takes this arbitration agreement outside the bounds 20 of Cook as either side may equally compel arbitration of covered employment-related disputes 21 between them, and there is no carve-out preserving a unilateral right for PeopleReady or its 22 affiliates to litigate those disputes in court. See Burkhardt, 2025 WL 2172287, at *8 23 (distinguishing Cook in similar mutuality challenge). Because there is no carve-out granting 24 PeopleReady or its affiliates distinct rights from those of Perez, the arbitration agreement contains 25 the necessary “modicum of bilaterality.” Armendariz, 24 Cal .4th at 117. Perez fails to show a 26 substantively unconscionable lack of mutuality. 27 * * * ] Having determined that the arbitration agreement is neither procedurally nor substantively 2 || unconscionable and must be enforced, the Court must consider Defendants’ request to stay these 3 || proceedings pending arbitration. “When a district court finds that a lawsuit involves an arbitrable 4 || dispute, and a party requests a stay pending arbitration, § 3 of the FAA compels the court to stay 5 || the proceeding.” Smith v. Spizzirri, 601 U.S. 472, 478 (2024). Defendants’ motion to stay is 6 || therefore GRANTED. 7 || 1. CONCLUSION 8 For the foregoing reasons, the Court GRANTS Defendants’ motion to compel and motion 9 || tostay. The parties SHALL FILE a joint status report on June 1, 2026, and every 90 days 10 || thereafter, to inform the Court of the status of the arbitration proceedings. 1] %L IT IS SO ORDERED. 13 Dated: March 6, 2026

15 2 ARACELI MARTINEZ-OLGUIN = 16 United States District Judge 17

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