1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 LIONEL HARPER, individually and No. 2:19-cv-00902 WBS DMC on behalf of all others 13 similarly situated and all aggrieved employees, 14 MEMORANDUM AND ORDER RE: Plaintiff, CHARTER’S MOTION TO COMPEL 15 ARBIRATION, DISMISS PUTATIVE v. CLASS CLAIMS, AND STAY THE 16 PAGA CLAIMS; AND RE: CHARTER COMMUNICATIONS, LLC, PLAINTIFF’S MOTION TO CONFIRM 17 CHARTER COMMUNICATIONS, INC., ARBITRATION AWARD AND ENTER and DOES 1 through 25, JUDGMENT. 18 Defendant. 19
20 ----oo0oo---- 21 Plaintiff Lionel Harper initiated this putative class 22 action against defendants Charter Communications, LLC, and 23 Charter Communications, Inc. (collectively “the Charter 24 defendants” or “Charter”) following a JAMS arbitration award 25 confirming that Harper’s wage-and-hour dispute is inarbitrable. 26 Plaintiff moves this court to confirm that arbitration award and 27 enter judgment on it as if it had been rendered in this court. 28 1 (Docket No. 9.) The Charter defendants not only oppose this 2 motion (Docket No. 15), but they also move this court to compel 3 arbitration of plaintiff’s individual claims, dismiss the 4 putative class claims, and stay plaintiff’s PAGA claims. (Docket 5 No. 11.) 6 I. Factual and Procedural Background 7 The Charter defendants market and sell 8 telecommunications services nationwide, including in California. 9 (Notice of Removal, Ex. A (“Compl.”) ¶ 9 (Docket No. 1-1).) From 10 approximately September 2017 to March 2018, plaintiff worked for 11 the Charter defendants as a salesperson in California. (Id. ¶ 12 5.) 13 Upon hire, plaintiff signed a “Mutual Agreement to 14 Arbitrate.” (Soderstrom Decl., Ex. 1 (“JAMS Arbitration 15 Agreement”) (Docket No. 9-1).) That agreement required 16 arbitration of “any and all claims, disputes, and/or 17 controversies between [plaintiff] and Charter arising from or 18 related to [plaintiff’s] employment with Charter.” (Id.) It 19 designated JAMS as the arbitration provider and stated that JAMS 20 Employment Arbitration Rules & Procedures and JAMS Policy on 21 Employment Arbitration Minimum Standards of Procedural Fairness 22 would govern the arbitration of claims between plaintiff and 23 Charter. (Id.) The JAMS Arbitration Agreement also included a 24 waiver of representative, collective, and class actions (the 25 “Waiver”) and a severance and so-called “poison pill” provision. 26 That provision stated that if the Arbitration Agreement or any 27 part thereof was found to be void or unenforceable, then: 28 1 [T]he remainder of the Agreement shall be enforced without the invalid, unenforceable, or 2 unconscionable clause or term, or the application of the clause or term shall be limited as to 3 avoid any invalid, unenforceable, or unconscionable result. The only exception to this 4 severability provision is, should the dispute involve a representative, collective or class 5 action claim, and the [Waiver] is found to be invalid or unenforceable for any reason, then 6 this entire Agreement (except for the parties’ agreement to waive a jury trial) shall be null 7 and void and the dispute will not be arbitrable. 8 (Id.) 9 On October 6, 2017, while plaintiff was still employed 10 by the Charter defendants, Charter adopted a new arbitration 11 agreement that required arbitration of claims via “Solution 12 Channel,” Charter’s employment-based legal dispute resolution 13 program. Unlike the JAMS Arbitration Agreement, the Solution 14 Channel Arbitration Agreement provides for arbitration under the 15 auspices and pursuant to the rules of the American Arbitration 16 Association. (Def.’s Mot. to Compel Arbitration at 4.) Charter 17 announced this change via e-mail to all active non-Union 18 employees below the level of Executive Vice President, plaintiff 19 among them. (See Knapper Decl., Ex. B (Docket No. 11-2).) 20 Defendant states that the Solution Channel announcement email 21 “indicated to Employees, including Plaintiff, that they would be 22 enrolled in Solution Channel, and bound by the new Arbitration 23 Agreement, unless they opted out within 30 days.” (Def.’s Mot. 24 to Compel Arbitration at 3.) Plaintiff did not opt out and, as a 25 result, defendant contends, all of his claims against Charter are 26 subject to the terms of the new Solution Channel Arbitration 27 Agreement. (Id.) 28 Plaintiff alleges that during his employment with 1 Charter, Charter violated a variety of wage and hour laws by, for 2 example, failing to pay overtime wages, failing to pay minimum 3 wage for all hours worked, failing to provide rest breaks or pay 4 premium wages in lieu of rest breaks, and failing to provide 5 accurate wage statements. (See Compl. ¶¶ 22-76.) In May 2018, 6 after the termination of his employment with defendant, plaintiff 7 contacted JAMS and asked to mediate his grievances against 8 Charter. JAMS then contacted Charter regarding this request and 9 Charter responded stating: 10 While Charter is willing to arbitrate Mr. 11 Harper’s claims, the Company is not willing to Mediate them, as that is not part of the 12 Company’s Solution Channel process, to which he is bound. Can you check with Mr. Harper and see 13 if he is interested in Arbitrating his claims? 14 (Soderstrom Decl., Ex. 2 (Docket No. 9-1).) 15 Though Charter’s initial response to the mediation- 16 inquiry mentioned the “Solution Channel process,” subsequent 17 correspondence from Charter’s counsel makes clear that defendant 18 sought to enforce the JAMS Arbitration Agreement against 19 plaintiff. Specifically, on July 3, 2018, Zachary Shine, outside 20 counsel for Charter, sent plaintiff’s counsel a letter requesting 21 that Harper stipulate to arbitration of his claims against 22 Charter. That letter continued: 23 Mr. Harper, at the time of his hire, entered into 24 a Mutual Arbitration Agreement (“Agreement”) with Charter in which he agreed to arbitrate all 25 employment-related claims. A copy of the 26 agreement, which was acknowledged by Mr. Harper, is enclosed with this letter. The Agreement 27 states “that any and all claims, disputes, and/or controversies between you and Charter arising 28 1 from or related to your employment with Charter shall be submitted exclusively to and determined 2 exclusively by binding arbitration before a single Judicial Arbitration and Mediation 3 Services, Inc. (“JAMS”) arbitrator under the 4 Federal Arbitration Act, 9 U.S.C. § 1 et seq.” We understand Mr. Harper has already initiated 5 the alternative dispute resolution process with JAMS, and are hopeful he will continue to abide 6 by his agreement to submit any claims he intends to assert against Charter to binding arbitration. 7 . . . Please let me know at your earliest 8 convenience whether Mr. Harper will stipulate to binding arbitration with JAMS pursuant to the 9 Mutual Arbitration Agreement.
10 (Id., Ex. 4.) Attached to that letter was a copy of the JAMS 11 Arbitration Agreement plaintiff signed when he commenced his 12 employment with Charter. Shine’s July 3, 2018, letter contained 13 no mention of the Solution Channel Agreement. 14 Plaintiff acquiesced to defendant’s demand for binding 15 arbitration through JAMS. In September 2018, he filed a PAGA 16 notice with the California Labor and Workforce Development 17 Agency. (Soderstrom Decl., Ex. 7 (Docket No. 9-1).) Plaintiff 18 did not receive notice of the agency’s intent to investigate the 19 Labor Code violations he alleged within 65 days and, on November 20 19, 2018, he filed a Demand for Arbitration and Request for 21 Rulings as to Inarbitrability with JAMS. (Id, Ex. 8.) 22 Plaintiff’s demand asked the arbitrator to rule on: (1) whether 23 the arbitrator had the authority to decide all enforceability, 24 scope, and arbitrability issues; (2) whether the entire 25 Arbitration Agreement is “null and void” by its own terms; and 26 (3) whether arbitration jurisdiction existed beyond the ability 27 of the arbitrator to rule that the Arbitration Agreement was 28 1 “null and void.” (Id.) 2 After Harper filed his demand with JAMS, Charter paid 3 its share of the JAMS arbitration costs and fees and participated 4 in the selection of the Honorable Rebecca J. Westerfield (Ret.) 5 as the arbitrator. (Id. ¶ 11.) Following a preliminary hearing, 6 the arbitrator ordered Charter to produce no later than February 7 22, 2019 “any job application related or onboarding documents 8 [Harper] may have completed, signed, acknowledged, or been 9 provided” and “any employee handbooks or other policies, 10 acknowledgements, or agreements that governed [Harper’s] 11 employment.” (Id., Ex. 12.) Charter produced documents in 12 response to this discovery order. (Id. ¶ 15.) 13 Harper then filed a motion for threshold rulings from 14 the arbitrator as to the inarbitrability of plaintiff’s claims. 15 (Id., Ex. 13.) Charter responded to that motion and argued that 16 plaintiff’s claims were arbitrable pursuant to the JAMS 17 Arbitration Agreement. (Id., Ex. 14.) On April 25, 2019, the 18 arbitrator issued an award granting Harper’s motion, finding that 19 plaintiff’s wage-and-hour claims were inarbitrable, and 20 dismissing the arbitration for lack of arbitration jurisdiction. 21 (Id., Ex. 16.) 22 At no point during the five-month pendency of the JAMS 23 arbitration did the Charter defendants assert that the JAMS 24 Arbitration Agreement was superseded by the Solution Channel 25 Arbitration Agreement. On May 3, 2019, Harper initiated this 26 action in California state court. (See Compl.) It was not until 27 several weeks later that defendant first sought to enforce its 28 rights under the Solution Channel Agreement. Specifically, on 1 May 22, 2019, defendant’s counsel wrote to plaintiff’s counsel 2 and asked them to stipulate to “arbitrate his claims on an 3 individual basis and dismiss his putative class and 4 representative claims” pursuant to the Solution Channel 5 Arbitration Agreement. (Soderstrom Decl., Ex. 17.) Plaintiff 6 declined to so stipulate. (Id. ¶ 22.) 7 This series of events has led to the two motions 8 presently before the court. Plaintiff moves the court to confirm 9 the JAMS arbitration award and enter judgment. Defendant moves 10 the court to enforce its rights under the Solution Channel 11 Agreement by compelling arbitration of plaintiff’s claims, 12 dismissing the putative class claims, and staying plaintiff’s 13 PAGA claims. 14 II. Discussion 15 A. Plaintiff’s Motion to Confirm the Arbitration Award 16 Section 9 of the Federal Arbitration Act provides that:
17 If the parties in their agreement have agreed that a judgment of the court shall be entered 18 upon the award made pursuant to the arbitration, and shall specify the court, then at any time 19 within one year after the award is made any party to the arbitration may apply to the court so 20 specified for an order confirming the award, and thereupon the court must grant such an order 21 unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of 22 this title. 23 9 U.S.C. § 9. 24 The Supreme Court has stated that, “[t]here is nothing 25 malleable about ‘must grant,’ which unequivocally tells courts to 26 grant confirmation in all cases, except when one of the 27 ‘prescribed’ exceptions applies.” Hall St. Assocs., L.L.C. v. 28 Mattel, Inc., 552 U.S. 576, 587 (2008). “An arbitrator's 1 decision must be upheld unless it is ‘completely irrational,’ or 2 it constitutes a ‘manifest disregard of law.’” Todd Shipyards 3 Corp. v. Cunard Line, Ltd., 943 F.2d 1056, 1060 (9th Cir. 1991) 4 (quoting French v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 5 784 F.2d 902, 906 (9th Cir. 1986)). As such, the confirmation of 6 an arbitration award is typically “a summary proceeding that 7 merely makes what is already a final arbitration award a judgment 8 of the court.” Romero v. Citibank USA, Nat’l Ass’n, 551 9 F.Supp.2d 1010, 1014 (E.D. Cal. 2008)(Wanger, J.)(quoting 10 Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984)). 11 The Charter defendants have not filed an application to 12 modify, correct, or vacate the arbitration award under 9 U.S.C. 13 §§ 10 or 11. Instead, the Charter defendants’ opposition 14 advances three arguments against the confirmation of the JAMS 15 arbitration award. The court will address each in turn. 16 1. Enforceability of the JAMS agreement. 17 First, Charter contends that this court cannot confirm 18 an arbitration award based on an agreement that was terminated 19 and is unenforceable. See Toal v. Tardif, 178 Cal. App. 4th 20 1208, 1221 (4th Dist. 2009)(“[B]efore a court may confirm an 21 arbitration award, the court must first find the existence of a 22 valid arbitration agreement.”). Since the Solution Channel 23 Arbitration Agreement contains an integration clause, Charter 24 argues, the JAMS Arbitration Agreement was terminated when the 25 parties entered into the Solution Channel Arbitration Agreement 26 in November, 2017. (Def.’s Opp. to Pl.’s Mot. to Confirm 27 Arbitration Award at 8.) Plaintiff contends that the parties did 28 have a valid agreement to arbitrate before JAMS because even if 1 the Solution Channel Arbitration Agreement was at some point the 2 operative agreement between the parties, it was superseded in 3 November 2018 when the parties revived the JAMS Arbitration 4 Agreement. 5 When determining whether a valid and enforceable 6 agreement to arbitrate exists, district courts apply “general 7 state-law principles of contract interpretation.” Goldman, Sachs 8 & Co. v. City of Reno, 747 F.3d 733, 743 (9th Cir. 2014). In 9 California, the essential elements of contract are: (1) parties 10 capable of contracting; (2) their consent; (3) a lawful object; 11 and, (4) sufficient cause or consideration. Cal. Civ. Code § 12 1550. All four elements are manifest in the parties’ November 13 2018 ascension to the JAMS Arbitration Agreement. 14 Charter’s request that Harper stipulate to binding 15 arbitration pursuant to the JAMS Arbitration Agreement was an 16 offer which Harper accepted when he filed his demand with JAMS on 17 November 19, 2018. With the exception of the PAGA waiver, the 18 JAMS Arbitration Agreement was indisputably a lawful object. 19 Moreover, the parties exchanged consideration by relinquishing 20 their rights to pursue alternate means of dispute resolution. 21 See GGNSC Louisville St. Matthews LLC v. Badgett, 728 F. App’x 22 436, 443 (6th Cir. 2018)(holding that parties exchanged 23 consideration for second arbitration agreement that allowed them 24 to litigate disputes when they gave up their contractual 25 obligation to arbitrate pursuant to a prior arbitration 26 agreement). 27 If the parties did not have an agreement to arbitrate 28 pursuant to the JAMS Arbitration Agreement, why did Charter 1 participate in the selection of a JAMS arbitrator? (Soderstrom 2 Decl. ¶ 11.) Why did Charter pay its share of the JAMS 3 arbitration fees? (Id.) Why did Charter brief the issue of 4 arbitrability before the JAMS arbitrator (id. Ex. 14) and 5 participate in discovery related to that issue (id. ¶ 15)? 6 These were all “outward manifestations of consent” to the JAMS 7 Arbitration Agreement that would “lead a reasonable person to 8 believe” that the parties had contracted to arbitrate pursuant to 9 the JAMS Arbitration Agreement. See Meyer v. Benko, 55 Cal. App. 10 3d 937, 942–43 (2d Dist. 1976) (“The existence of mutual consent 11 [to a contract] is determined by objective rather than subjective 12 criteria, the test being what the outward manifestations of 13 consent would lead a reasonable person to believe.”) 14 For these reasons, the court finds that, at the time of 15 the arbitrator’s award, the parties had an enforceable agreement 16 to arbitration pursuant to the JAMS Arbitration Agreement. 17 Accordingly, the court rejects the Charter defendants’ argument 18 that the JAMS Arbitration Agreement was unenforceable and that, 19 therefore, the arbitration award based on that agreement is 20 unconfirmable. 2. Parties’ Agreement to Court Enforcement of 21 Arbitration Award 22 Defendant’s second argument in opposition to the 23 confirmation of the arbitration award is that this court may not 24 confirm the arbitration award because the JAMS Arbitration 25 Agreement does not expressly provide for court enforcement of 26 arbitration awards. Defendant supports this argument by 27 reference to Varley v. Tarrytown Assocs., Inc., 477 F.2d 208, 210 28 1 (2d Cir. 1973).1 In that case, the Second Circuit held that a 2 party’s ascent to an agreement providing for the settlement of 3 controversies by arbitration pursuant to the rules of the 4 American Arbitration Association did not constitute consent to 5 the court enforcement of arbitration awards. Crucially, however, 6 “[a]t the time Varley was decided, there was “nothing in the [AAA 7 Commercial Arbitration Rules] which indicate[d] that the parties 8 thereby consent[ed] to the entry of judgment upon an award.” 9 Swissmex-Rapid S.A. de C.V. v. SP Sys., LLC, 212 Cal. App. 4th 10 539, 549 n.8 (2d Dist. 2012). 11 In contrast to the agreement at issue in Varley, the 12 JAMS Arbitration Agreement at issue in this case explicitly 13 incorporates the JAMS Rules by reference. Those Rules, in turn, 14 explicitly provide that, “[t]he Parties to an Arbitration under 15 these Rules shall be deemed to have consented that judgment upon 16 the Award may be entered in any court having jurisdiction 17 thereof.” JAMS Comprehensive Arbitration Rules & Procedures Rule 18 25. Thus, both defendant Charter and plaintiff “consented that 19 judgment upon the [arbitration award] may be entered in any court 20 having jurisdiction thereof.” See id. 21 3. Finality of JAMS Arbitration Award 22 Defendant’s third and final argument in opposition to 23
24 1 Defendant also relies on Oklahoma City Assocs. v. Wal- Mart Stores, Inc., 923 F.2d 791 (10th Cir. 1991). In that case, 25 the court ruled that a defendant did not implicitly consent to the AAA Rules through its action during the proceedings. Thus, 26 defendant’s reliance on Oklahoma City Assocs. is misplaced since 27 that holding did not consider the case in which, as here, the parties’ arbitration agreement expressly incorporates extrinsic 28 arbitration rules. 1 plaintiff’s Motion to Confirm Arbitration Award and Enter 2 Judgment is that the arbitration award in this case is not final. 3 Under 9 U.S.C § 10 (a)(4), a district court may vacate an 4 arbitration award where the arbitrator “so imperfectly” executed 5 her powers that “a mutual, final, and definite award upon the 6 subject matter submitted was not made.” 9 U.S.C § 10 (a)(4). 7 Defendant contends that the arbitrator’s decision on the 8 inarbitrability of plaintiff’s claims is not a “final” and 9 confirmable award because it did not conclusively resolve the 10 merits of plaintiff’s claims. 11 This position is undermined by the weight of relevant 12 case law, which indicates that a ruling on arbitrability is a 13 confirmable “final award.” See e.g., Towers, Perrin, Forster & 14 Crosby, Inc. v. Brown, 732 F.2d 345, 348 (3d Cir. 1984)(“What 15 little case law there is on point indicates that the decision 16 that a dispute is or is not arbitrable is conclusive of that 17 issue.”). The court accordingly finds that the arbitration award 18 in this case “do[es] not serve as a preparation or a basis for 19 further decisions by the arbitrator” and “has finally and 20 conclusively disposed of a separate and independent claim and 21 therefore may be confirmed although [the order does] not dispose 22 of all the claims that were submitted to arbitration.” See Glob. 23 Gold Min. LLC v. Caldera Res., Inc., 941 F. Supp. 2d 374, 383 24 (S.D.N.Y. 2013)(quotations omitted)(quoting Zeiler v. Deitsch, 25 500 F.3d 157, 169 (2d Cir. 2007)). 26 The parties had a valid and enforceable agreement to 27 submit issues related to the arbitrability of the JAMS 28 Arbitration Award to a JAMS arbitrator, and the JAMS Arbitration 1 Agreement explicitly provided for the confirmation of any 2 resultant arbitration awards by a court. Moreover, the 3 arbitrator’s Order Dismissing Arbitration (Soderstrom Decl., Ex. 4 16) was a “final” order confirmable under 9 U.S.C. § 9. Finally, 5 the court has reviewed the Order Dismissing Arbitration and finds 6 no evidence that it is “completely irrational” or constitutes a 7 “manifest disregard of the law.” See French, 784 F.2d at 906. 8 For those reasons, the court will grant plaintiff’s Motion to 9 Confirm Arbitration Award and Enter Judgment.
10 B. Defendant’s Motion to Compel Arbitration of Plaintiff’s Individual Claims under the Solution Channel 11 Arbitration Agreement, and to Dismiss the Putative Class Claims, and Stay the PAGA Claims 12
13 1. Motion to Compel Arbitration of Plaintiff’s Individual Claims 14 15 Defendant contends that plaintiff’s complaint was filed 16 was filed “in violation of his agreement to arbitrate.” (Mot. to 17 Compel Arbitration at 5.) It moves this court to compel 18 arbitration pursuant to the Solution Channel Arbitration 19 Agreement. Plaintiff opposes Charter’s Motion to Compel 20 Arbitration on the grounds that the Solution Channel Arbitration 21 was superseded by the parties’ assent to arbitrate pursuant to 22 the JAMS Arbitration Agreement in November 2018. 23 Both plaintiff and defendant advance a variety of 24 arguments about the validity or invalidity of the Solution 25 Channel Arbitration Agreement as applied to Harper. The court 26 need not reach these arguments because assuming arguendo that the 27 Solution Channel Arbitration Agreement was binding and valid on 28 the parties, the court finds that the parties’ ascension to the 1 terms of the JAMS Arbitration Agreement in November 2018, as 2 discussed supra, superseded and extinguished any rights and 3 obligations they may have had pursuant to the Solution Channel 4 Arbitration Agreement. 5 In California, novation, the “substitution of a new 6 obligation for an existing one,” Cal. Civ. Code § 1530, has four 7 essential elements: (1) “A previous valid obligation”; (2) “the 8 agreement of all the parties to the new contract”; (3) “the 9 extinguishment of the old contract”; and (4) “the validity of the 10 new one.” Young v. Benton, 21 Cal. App. 382, 384 (3d Dist. 11 1913). Where there has been novation, “the rights and duties of 12 the parties must be governed by the new agreement alone, and a 13 failure to perform (thereunder) does not, under any theory of 14 rescission or revivor, operate to breathe new life into the dead 15 and extinguished obligation.” Alexander v. Angel, 37 Cal. 2d 16 856, 862 (1951)(quotations and citation omitted). 17 The court assumes for the purpose of this analysis 18 alone that the Solution Channel Arbitration Agreement was valid 19 as to Harper and Charter. It has previously found that the 20 parties agreed to a new contract in November 2018. The court’s 21 analysis of whether a novation has occurred, then, will focus on 22 the third and fourth elements of novation, i.e. whether the JAMS 23 Arbitration Agreement superseded the Solution Channel Arbitration 24 Agreement, and whether, for the purposes of this novation 25 analysis, the JAMS Arbitration Agreement was “valid.” 26 With respect to the third element, the key inquiry in 27 determining whether the JAMS Arbitration Agreement extinguished 28 the Solution Channel Arbitration Agreement is “whether the 1 parties intended their writing [the JAMS Arbitration Agreement] 2 to serve as the exclusive embodiment of their agreement.” 3 Posephny v. AMN Healthcare Inc., No. 18-CV-06284-KAW, 2019 WL 4 452036, at *4 (N.D. Cal. Feb. 5, 2019)(quoting Masterson v. Sine, 5 68 Cal. 2d 222, 225 (1968). The presence of an integration 6 clause in a contract is a factor which “may help resolve” this 7 issue, but it is not dispositive. See Kanno v. Marwit Capital 8 Partners II, L.P., 18 Cal. App. 5th 987, 1001 (4th Dist. 9 2017)(quoting Masterson, 68 Cal. 2d at 225). Rather, collateral 10 agreements must be examined “to determine whether the parties 11 intended the subjects of negotiation it deals with to be included 12 in, excluded from, or otherwise affected” by the purportedly 13 integrated writing. See Masterson, 68 Cal. 2d at 226.2 14 The JAMS Arbitration Agreement contains an integration 15 clause. It states that, “[t]his Arbitration Agreement supersedes 16 any other agreement to arbitrate previously in place between you 17 and Charter.” (See JAMS Arbitration Agreement.) The Solution 18
19 2 The Charter defendants cite Halvorsen v. Aramark Unif. Servs., Inc., 65 Cal. App. 4th 1383, 1388 (1998)(citation and 20 quotation omitted), for the proposition that “[t]here cannot be a valid express contract and an implied contract, each embracing 21 the same subject, but requiring different results.” That case is 22 easily distinguishable from the instant matter. In Halvorsen, the plaintiff argued that the defendant had breached an implied- 23 in-fact agreement not to terminate him except for cause. The court rejected this argument and held that “factors supporting a 24 finding of an implied-in-fact employment agreement are irrelevant when . . . there is an express agreement.” Id. Unlike the 25 plaintiff in Halvorsen, Harper is not claiming that there is an implied-in-fact contract between the parties. Rather, plaintiff 26 is arguing that the Solution Channel Arbitration Agreement was 27 superseded in November 2018 by a different express contract, i.e. the JAMS Arbitration Agreement. 28 1 Channel Arbitration Agreement expressly pertained the arbitration 2 of claims between the parties. For example, it proscribed how 3 employees like Harper should initiate claims against Charter and 4 detailed the timeline on which the parties would select an 5 arbitrator. (See Knapper Decl. Ex D.) As such, the Solution 6 Channel Arbitration Agreement is clearly an “agreement to 7 arbitrate” within the meaning of the JAMS Arbitration Agreement 8 integration clause. Given this, the third element of novation, 9 i.e. the extinguishment of the old contract, is satisfied. 10 With regard to the fourth and final element of 11 novation, the validity of the new contract, at first blush it may 12 appear that the arbitrator’s ruling, confirmed by this court, 13 finding plaintiff’s claims inarbitrable under the JAMS agreement 14 is inconsistent with a finding that that agreement constituted a 15 valid contract. However, in the context of novation, the 16 judicial inquiry into the validity of the putative new contract 17 is typically narrowly focused on issues of contract formation 18 that would render the contact void ab initio. See Beckwith v. 19 Sheldon, 165 Cal. 319, 324 (1913)(noting that courts evaluating 20 whether novation has taken place routinely “look no further than 21 . . . whether the new contract was entered into without fraud and 22 with an agreement of minds that it was to be substituted for the 23 existing obligation.”); see also Restatement (Second) of 24 Contracts § 279 (“[T]o the extent that the substituted contract 25 is vulnerable on such grounds as mistake, misrepresentation, 26 duress or unconscionability, recourse may be had on the original 27 duty.”). See also Airs Int’l, Inc. v. Perfect Scents 28 Distributions, Ltd., 902 F. Supp. 1141, 1149 (N.D. Cal. 1 1995)(holding that if the parties’ second contract is “ultimately 2 determined invalid in its inception because . . . it was procured 3 by fraud, the purported rescission of the [first] contract would 4 be ineffective and the [first] contract would be revived.”); 5 Rejuso v. Brookdale Senior Living Communities, Inc., No. CV 17- 6 5227-DMG (RAO), 2018 WL 6173384 (C.D. Cal. Nov. 13, 7 2018)(reviving prior arbitration agreement after finding that the 8 parties’ most recent arbitration agreement was unconscionable). 9 In cases where the new contract was not unconscionable, 10 was entered into without fraud, and was merely void on statutory 11 grounds, several courts have held that the “invalid” contract may 12 serve as the basis for novation. See Producers’ Fruit Co. of 13 California v. Goddard, 75 Cal. App. 737, 755 (3d Dist. 14 1925)(holding that “if legally unobjectionable in all other 15 respects,” a contract invalid under the statute of frauds may 16 serve as the basis of a novation); George Foreman Assocs., Ltd. 17 v. Foreman, 389 F. Supp. 1308 (N.D. Cal. 1974), aff’d on other 18 grounds, 517 F.2d 354 (9th Cir. 1975)(declining to revive prior 19 contract even after finding that parties’ most recent agreement 20 was void and unenforceable under California law); Thiele v. 21 Merrill Lynch, Pierce, Fenner & Smith, 59 F. Supp. 2d 1067, 1072 22 (S.D. Cal. 1999)(“The fact that the [Old Workers Benefit 23 Protection Act] prevents enforcement of this arbitration clause 24 as to some of [plaintiff’s] claims does not revive the 25 arbitration clauses in the earlier agreements.”). 26 In the instant case, the JAMS Arbitration Agreement’s 27 waiver of representative claims under PAGA is unenforceable as a 28 matter of state law. (See Soderstrom Decl. Ex 16 at 3-5 (“Order 1 Dismissing Arbitration”)(Docket No. 9-1). See also Iskanian v. 2 CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014). The 3 remainder of the JAMS Arbitration Agreement (save for the 4 parties’ agreement to waive a jury trial) is void because of the 5 “poison pill” provision contained within the agreement. See 6 Soderstrom Decl. Ex 16 at 7-9.) Thus, though almost all of the 7 JAMS Arbitration Agreement is invalid and unenforceable, this 8 invalidity is due to state law and the terms of the contract, not 9 to any fraud or unconscionability. Thus, like the “new” 10 contracts at issue in Goddard, 75 Cal. App. 737, and George 11 Foreman Associates, 517 F.2d 354, the JAMS Arbitration Agreement 12 is “valid” for the purposes of the court’s novation analysis.3 13 In light of the foregoing, the court finds that there 14 was a novation and that any rights the parties may have had 15 pursuant to the Solution Channel Arbitration Agreement were 16 rendered “dead and extinguished” by the parties’ ascension to the 17 JAMS Arbitration Agreement in November 2018. See Alexander v. 18 Angel, 37 Cal. 2d 856, 862 (1951).
19 2. Motion to Dismiss Plaintiff’s Class Claims
20 Charter’s Motion to Dismiss Plaintiff’s Class Claims 21
22 3 Plaintiff argues alternatively that even if the Solution Channel Arbitration Agreement is binding on the parties, 23 Charter has waived its right to compel arbitration under that agreement. Waiver of a right to arbitration occurs when a 24 party: (1) has knowledge of its right to compel arbitration; (2) acts inconsistently with that right; and (3) in doing so, 25 prejudices the party opposing arbitration. See Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986). The 26 court need not reach plaintiff’s waiver argument, however, 27 because it finds that any rights and obligations the parties may have had under the Solution Channel Arbitration Agreement were 28 superseded by the JAMS Arbitration Agreement in November 2018. 1 argues that plaintiff cannot assert class claims against Charter 2 because he is subject to the class action waiver in the Solution 3 Channel Arbitration Agreement. The court has already found that 4 any rights the parties may or may not have had pursuant to the 5 Solution Channel Arbitration Agreement were superseded and 6 extinguished by the JAMS Arbitration Agreement. See supra. 7 Accordingly, plaintiff is not bound the by the Solution Channel 8 Arbitration Agreement’s class action waiver and the court will 9 deny defendant’s Motion to Dismiss Plaintiff’s Class Claims.
10 3. Motion to Stay Plaintiff’s PAGA Claims 11 12 Concurrent with their Motion to Compel Arbitration and 13 their Motion to Dismiss, defendants move this court to stay 14 plaintiff’s PAGA claims pending the arbitration of plaintiff’s 15 individual claims. See Aviles v. Quik Pick Express, LLC, 703 F. 16 App’x 631, 632 (9th Cir. 2017)(instructing district court to stay 17 plaintiff’s PAGA claims during arbitration of his individual 18 claims). The Charter defendants argue that staying plaintiff’s 19 PAGA claims would promote judicial economy and allow the 20 avoidance of res judicata and collateral estoppel issues. (Mot. 21 to Compel Arbitration at 15-16.) In light of the fact that this 22 court will neither compel arbitration of plaintiff’s individual 23 claims nor dismiss his class claims, defendant’s argument is 24 moot. 25 IT IS THEREFORE ORDERED that plaintiff’s Motion to 26 Confirm Arbitration Award and Enter Judgment (Docket No. 9) be, 27 and the same hereby is, GRANTED. 28 IT IS FURTHER ORDERED that defendant’s Motion to Compel 1 Arbitration of Plaintiff’s Individual Claims, Dismiss the 2 Putative Class Claims, and Stay the PAGA Claims (Docket No. 11) 3 be, and the same hereby is, DENIED. 4 Dated: August 6, 2019 : ~ ak. ah Lhe, (LA. WILLIAM B. SHUBB 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 20