Harper v. Charter Communications, LLC

District Court, E.D. California·Decided December 19, 2019·No. 2:19-cv-01749·Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 LIONEL HARPER, No. 2:19-cv-01749 WBS DMC 13 Plaintiff, 14 v. ORDER RE: MOTION TO COMPEL ARBITRATION AND DISMISS OR 15 CHARTER COMMUNICATIONS, LLC, STAY JUDICIAL PROCEEDINGS CHARTER COMMUNICATIONS, INC., 16 and DOES 1 through 25, 17 Defendants. 18 19 ----oo0oo---- 20 Plaintiff Lionel Harper brought this action against 21 defendants Charter Communications, LLC and Charter 22 Communications, Inc. (collectively “Charter”), alleging, inter 23 alia, violation of California’s Fair Employment and Housing Act 24 (“FEHA”), Cal. Gov. Code § 12900 et seq. Before this court is 25 Charter’s motion to compel arbitration and dismiss or stay 26 judicial proceedings. (Mot. to Compel Arbitration (Docket No. 27 10).) 28 I. Facts & Procedural History 1 Plaintiff worked for Charter as a salesperson in 2 California from September 2017 to March 2018. (Compl. ¶ 9 3 (Docket No. 1).) Upon hire, plaintiff signed an agreement to 4 arbitrate “any and all claims, disputes, and/or controversies 5 between [plaintiff] and Charter arising from or related to 6 [plaintiff’s] employment with Charter” before a single arbitrator 7 from the Judicial Arbitration and Mediations Services, Inc. 8 (“JAMS Arbitration Agreement”). (Decl. of Chance Cassidy 9 (“Cassidy Decl.”), Ex. B (Docket No. 10-3); Decl. of Lionel 10 Harper (“Harper Decl.”) ¶ 2 (Docket No. 22-1).) According to the 11 agreement, JAMS Employment Arbitration Rules & Procedures and 12 JAMS Policy on Employment Arbitration Minimum Standards of 13 Procedural Fairness would govern the arbitration of any claims 14 between plaintiff and Charter. (Cassidy Decl., Ex. B.) Under 15 these rules, Charter would “bear all costs unique to arbitration, 16 except for the Case Initiation Fee, which would be split between 17 [plaintiff] and Charter.” (Cassidy Decl., Ex. B.) The agreement 18 provided the arbitrator’s decision would be “final and binding” 19 on both parties. (Cassidy Decl., Ex. B.) 20 On October 6, 2017, Charter adopted a new arbitration 21 agreement that required arbitration of claims via “Solution 22 Channel,” Charter’s employment-based legal dispute resolution 23 program. (See Decl. of John Fries (“Fries Decl.”), Ex. A (Docket 24 No. 10-2).) Unlike the JAMS Arbitration Agreement, the Solution 25 Channel Arbitration Agreement provided for arbitration under the 26 rules of the American Arbitration Association and instituted an 27 internal review process before claims proceeded to arbitration. 28 (See generally Fries Decl., Ex. C.) Charter announced this 1 change via e-mail to all active non-Union employees below the 2 level of Executive Vice President, plaintiff among them. (Fries 3 Decl. ¶ 5, Ex. E.) The Solution Channel announcement email 4 notified employees that “[b]y participating in Solution Channel, 5 [employees] and Charter both waive the right to initiate or 6 participate in court litigation.” (Fries Decl., Ex. A.) 7 Additionally, the announcement warned employees that they would 8 be enrolled into Solution Channel unless they “opt[ed] out of 9 participating in Solution Channel within the next 30 days.” 10 (Fries Decl., Ex. A.) The email directed employees interested in 11 opting out to go to Panorama, Charter’s intranet site, for more 12 information. (Fries Decl., Exs. A, B.) Plaintiff did not opt 13 out. (Fries Decl. ¶ 21.) 14 Around January 2018, Harper allegedly developed acute 15 pain in his lower back and was advised by a medical professional 16 to take several days off work. (Compl. ¶ 10.) Plaintiff 17 contends he continued to work from home during his leave. (Id. ¶ 18 11.) On February 14, 2018, plaintiff’s manager placed plaintiff 19 on involuntarily unpaid leave. (Id. ¶ 12.) Representatives from 20 Charter’s third-party administrator and human resources 21 department contacted plaintiff, but plaintiff’s attempts to 22 respond allegedly went ignored. (Id. ¶¶ 12-13.) Charter 23 terminated plaintiff on March 12, 2018. (Id. ¶ 14.) Plaintiff 24 remained unemployed until March 2019, at which point he was able 25 to secure part-time work at a reduced hourly rate. (Id. ¶ 17.) 26 On November 19, 2018, plaintiff filed a Demand for 27 Arbitration against Charter alleging various wage and hour claims 28 pursuant to the JAMS Arbitration Agreement. (Decl. of Kathryn 1 McGuigan (“McGuigan Decl.”), Ex. 1 (Docket No. 10-1).) Although 2 plaintiff had been enrolled in the Solution Channel Arbitration 3 Agreement in October 2017, at all relevant times Charter relied 4 upon the JAMS Arbitration Agreement as binding on the parties. 5 Harper v. Charter Commc’ns, LLC, 2:19-cv-902-WBS-DMC, 2019 WL 6 3683706, at *8 (E.D. Cal. Aug. 6, 2019) (hereinafter Harper I). 7 Accordingly, the parties proceeded through the JAMS process, and 8 the JAMS arbitrator issued an Order Dismissing Arbitration after 9 finding she had no jurisdiction over the action on April 25, 10 2019. (McGuigan Decl., Ex. 2.) 11 Following the arbitrator’s order in his wage and hour 12 claim dispute, plaintiff filed a separate Demand for Arbitration 13 with JAMS alleging eight additional employment-related claims 14 against Charter, including (1) discrimination and wrongful 15 discharge under FEHA; (2) failure to make a reasonable 16 accommodation under FEHA; (3) failure to engage in a timely and 17 good faith interactive process under FEHA; (4) age discrimination 18 under FEHA; (5) retaliation under FEHA; (6) wrongful termination 19 in violation of public policy; (7) violation of Investigative 20 Consumer Reporting Agencies Act, Cal. Civ. Code § 1786; and (8) 21 violation of California’s Unfair Competition Law, Cal. Bus. & 22 Prof. Code § 17200, (collectively, “FEHA claims”) on April 30, 23 2019.1 (McGuigan Decl., Ex. 3.) Pursuant to the JAMS 24 1 Plaintiff complied with FEHA’s exhaustion requirements 25 by filing a complaint with California’s Department of Fair Employment and Housing and obtaining a right to sue letter on 26 December 31, 2018. (Compl. ¶ 6; see also McGuigan Decl., Ex. 3 27 (incorporating plaintiff’s second Demand for Arbitration in full, including a copy of the right to sue letter at Ex. 2).) Charter 28 accepted service of plaintiff’s right to sue on January 3, 2019. 1 Arbitration Agreement, plaintiff paid his share of the Case 2 Initiation Fee to bring his FEHA claims to arbitration. (Decl. 3 of Jamin Soderstrom (“Soderstrom Decl.”) ¶ 8 (Docket No. 22-2).) 4 Plaintiff and JAMS then asked Charter to pay its share of the 5 fees so arbitration could commence. (Soderstrom Decl. ¶ 9, Exs. 6 6-9.) Charter refused. (Id.) 7 After the JAMS arbitrator had rendered her decision as 8 to plaintiff’s wage and hour claims but before arbitration had 9 commenced over plaintiff’s FEHA claims, Charter attempted to 10 compel plaintiff to arbitrate his wage and hour claims under the 11 Solution Channel Arbitration Agreement. (McGuigan Decl., Exs. 4- 12 5.) Plaintiff refused, and instead moved to confirm the 13 arbitrator’s finding of non-arbitrability in this court. (See 14 Mot. to Confirm Arbitration Award and Enter Judgment in Harper v. 15 Charter Commc’ns, LLC, 2:19-cv-00902-WBS-DMC (Docket No. 9).) 16 This court affirmed the arbitrator’s finding that the wage and 17 hour claims were not arbitrable on August 6, 2019. See Harper I, 18 2019 WL 3683706, at *8. 19 However, plaintiff’s FEHA claims remained unresolved 20 before JAMS because Charter had still not paid its portion of the 21 filing fee. After this court’s confirmation of the arbitration 22 award, JAMS contacted the parties on August 7, 2019 and advised 23 them if JAMS did not receive the funds by August 15, plaintiff 24 would “ha[ve] the option to pay to proceed” on his FEHA claims. 25 (Soderstrom Decl.

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22 2 Plaintiff argues that he has been prejudiced insofar as the adjudication of his claims has been delayed seven months and 23 he has incurred extraneous filing fees and attorney’s fees. (Opp. to Mot to Compel Arbitration at 14; Soderstrom Decl. ¶ 16.) 24 In so doing, plaintiff relies on Brown v. Dillard’s, Inc., 430 F.3d 1004, 1012-13 (9th Cir. 2005). However, in Brown, Dillard’s 25 breached its arbitration agreement with its employee by refusing to participate in the arbitration processes both parties had 26 consented to use. Id. at 1010. Here, while Charter refused to 27 participate in the outdated JAMS process, it is attempting to arbitrate under the Solution Channel Agreement. Brown is 28 therefore inapposite. 1 Cir. 2018) (internal citations omitted). If the determination is 2 in the affirmative on both counts, the FAA “mandates that 3 district courts shall direct the parties to proceed to 4 arbitration on issues as to which an arbitration agreement has 5 been signed.” Id. (citing Chrion Corp. v. Ortho Diagnostic Sys., 6 Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). It is undisputed 7 that the Solution Channel Arbitration Agreement encompasses 8 plaintiff’s FEHA claims. (Fries Decl., Ex. C, 1 ¶ B(1).) 9 Consequently, the court must consider only whether a valid 10 agreement to arbitrate exists. 11 “The party seeking arbitration bears the burden of 12 proving the existence of a valid arbitration agreement by the 13 preponderance of the evidence, and a party opposing the petition 14 bears the burden of proving by a preponderance of the evidence 15 any fact necessary to its defense.” Bridge Fund Capital Corp. v. 16 Fastbucks Franchise Corp., 622 F.3d 996, 1005 (9th Cir. 2010) 17 (citation omitted). “Arbitration is a matter of contract.” 18 Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 19 2014) (quoting AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 20 U.S. 643, 648 (1986) (internal modifications omitted)). State 21 contract law determines whether the arbitration agreement is 22 valid. Id. In California, the essential elements of contract 23 are: (1) parties capable of contracting; (2) their consent; (3) a 24 lawful object; and (4) sufficient cause or consideration. Cal. 25 Civ. Code § 1150. Plaintiff argues defendants cannot compel 26 arbitration under the Solution Channel Arbitration Agreement 27 because plaintiff never consented to the agreement and the 28 agreement itself is unconscionable. 1 1. Adequate Notice/Consent 2 Plaintiff argues the Solution Channel Arbitration 3 Agreement is not valid because he did not have adequate notice of 4 the agreement, and therefore he could not consent to it. (Opp. 5 to Mot. to Compel Arbitration at 15-20 (Docket No. 22).) 6 However, it is undisputed that Charter sent, and plaintiff 7 received, information regarding the Solution Channel Arbitration 8 Agreement, which explicitly warned employees that their inaction 9 would result in enrollment in the program. (Fries Decl., Ex. A.) 10 The Ninth Circuit has found recipients of similar arbitration 11 agreements impliedly consented to be bound by them if they did 12 not opt out within the designated time. See Johnmohammadi v. 13 Bloomingdale’s, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014) (“By 14 not opting out within the 30-day period, [employee] became bound 15 by the terms of the arbitration agreement.”); Circuit City 16 Stores, Inc. v. Ahmed, 283 F.3d 1198, 1200 (9th Cir. 2002) 17 (finding 30-day window to opt out of automatic enrollment in an 18 arbitration agreement was “meaningful”, “non-adhesive”, and 19 “lacked any other indicia of procedural unconscionability”).3

20 3 In both Johnmohammadi and Circuit City, the employees received notice of their respective employer’s arbitration 21 agreements and were advised they would be automatically enrolled 22 in the program if they failed to opt out. See 775 F.3d at 1074; 283 F.3d at 1199. Both agreements were upheld because the terms 23 were clear and unambiguous, and neither employer conditioned the employee’s continued employment on signing. See 775 F.3d at 1074 24 (“she made a fully informed and voluntary decision . . . no threats of termination or retaliation were made to influence her 25 decision”); 283 F.3d at 1199 (“[i]f Ahmed had decided to opt-out of the arbitration program, he would have been allowed to keep 26 his job and not participate in the program.”). Plaintiff asserts 27 the opt out right “is hardly meaningful when Charter still requires mandatory individual arbitration” under the JAMS 28 agreement. (Soderstrom Decl. ¶ 17.) However, plaintiff 1 Indeed, other district courts have applied that same rationale to 2 this very policy. See, e.g., Prizler v. Charter Commc’ns, LLC, 3 No. 3:18-cv-1724-L-MSB, 2019 WL 2269974, at *3 (S.D. Cal. May 28, 4 2019). Accordingly, plaintiff’s arguments that he did not 5 consent to the Solution Channel Arbitration Agreement fail. 6 2. Unconscionability 7 Plaintiff also argues that the Solution Channel 8 Arbitration Agreement is unconscionable, and therefore 9 unenforceable. Under California law, the court must determine 10 unconscionability at the time the contract was formed. Sonic- 11 Calabasas A, Inc. v. Moreno, 57 Cal. 4th 1109, 1134 (2013). A 12 court will not enforce an otherwise valid contract if it is 13 unconscionable. Armendariz v. Found. Health Psychcare Servs. 14 Inc., 24 Cal. 4th 83, 114 (2000). However, “[t]he prevailing 15 view is that procedural and substantive unconscionability must 16 both be present in order for a court to exercise its discretion 17 to refuse to enforce a contract” because “[a]rbitration is 18 favored . . . as a means of resolving disputes.” Id. at 114-15. 19 Accordingly, courts require evidence of both types of 20 unconscionability to overcome the state’s policy in favor of 21 arbitrability. Id. These two elements need not both be present 22 consented to be bound by the JAMS agreement upon his hire. 23 Presenting arbitration agreements on a “take it or leave it basis” is “not enough, by itself, to render the agreement 24 unenforceable.” Moreno v. Banamex USA, No. CV 14-3049 PSG (PLAx), 2014 WL 12534772, at *5 (C.D. Cal. June 20, 2014) (citing 25 Lagatree v. Luce, Forward, Hamilton & Scripps LLP, 74 Cal. App. 4th 1105, 1127 (2d. Dist. 1999) (“[A] compulsory predispute 26 arbitration agreement is not rendered unenforceable just because 27 it is required as a condition of employment or offered on a ‘take it or leave it’ basis.”)). 28 1 in the same degree. Instead, “the more substantively oppressive 2 the contract term, the less evidence of procedural 3 unconscionability is required to come to the conclusion that the 4 term is unenforceable.” Id. 5 i. Procedural Unconscionability 6 “The procedural element generally takes the form of an 7 adhesion contract, which imposed and drafted by the party of 8 superior bargaining strength, relegates to the subscribing party 9 only the opportunity to adhere to the contract or reject it.” 10 Fitz v. NCR Corp., 118 Cal. App. 4th 702, 713 (4th Dist. 2004). 11 While Charter had the superior bargaining power in this situation 12 because it drafted and imposed the Solution Channel Arbitration 13 Agreement, it was not procedurally unconscionable because 14 plaintiff had the opportunity to opt out. See Kilgore v. 15 KeyBank, Natl. Ass’n, 718 F.3d 1052, 1059 (9th Cir. 2013) (en 16 banc) (citing Circuit City, 283 F.3d at 1199-2000). In Kilgore, 17 the Ninth Circuit found an arbitration agreement binding former 18 students of a failed flight-training school was not procedurally 19 conscionable because the students were empowered to reject the 20 agreement within sixty days of signing and the arbitration clause 21 was “in its own section, clearly labeled, in boldface.” 718 F.3d 22 at 1058-59. Here, the changes to the arbitration agreement were 23 clearly denoted in Charter’s email to it employees, in its own 24 paragraph, and the time to opt out accompanied its announcement. 25 (See Fries Decl., Ex. A.) Accordingly, the agreement is not 26 procedurally unconscionable. 27 ii. Substantive Unconscionability 28 “The substantive element of unconscionability focuses 1 on the actual terms of the agreement and evaluates whether they 2 create overly harsh or one-sided results, that is, whether 3 contractual provisions reallocate risks in an objectively 4 unreasonable or unexpected manner.” Baker v. Osborne Dev. Corp, 5 159 Cal. App. 4th 884, 894 (4th Dist. 2008) (internal quotation 6 marks and citations omitted). Plaintiff claims the Solution 7 Channel Agreement has a “high degree of substantive 8 unconscionability” on multiple grounds. (Opp. to Mot. to Compel 9 Arbitration 26-33.) However, on the whole, plaintiff’s claims 10 lack merit. 11 Plaintiff most notably argues Solution Channel’s 12 internal review process is one-sided and permits Charter itself 13 to determine whether a claim is arbitrable. (Opp. to Mot. to 14 Compel Arbitration 26-29.) However, the internal review 15 mechanism specified in the Solution Channel Agreement applies 16 both to Charter and plaintiff. “Claimants” must first file their 17 claims with an internal review process before proceeding to 18 arbitration, and “claimants” include “current employee[s], former 19 employee[s], applicant[s] for employment, or Charter.” (Fries 20 Decl., Ex. C.) Both Charter and employees must “acknowledge and 21 attest to the accuracy of the information in the form and then 22 click Submit Claim” to initiate the process -- employees alone 23 are not held to submitting a sworn verification, as plaintiff 24 asserts. (Compare Fries Decl., Ex. C with Opp. to Mot. to Compel 25 Arbitration at 28.) 26 Furthermore, the Solution Channel Agreement does not 27 permit Charter to conclusively decide whether a claim is 28 arbitrable. Indeed, Solution Channel provides “[i]f [claimants] 1 are not satisfied with Charter’s decision following the internal 2 claim review” they can still “proceed with arbitration of [the] 3 claim,” at which point both parties will “jointly select an 4 arbitrator” from a list of five potential arbitrators selected by 5 the American Arbitration Association. (Fries Decl., Ex. C.) 6 Finally, the Solution Channel Agreement provides each 7 party will bear its own attorney’s fees regardless of the action 8 brought. (Fries Decl., Ex. C.) California courts have found 9 similar provisions unenforceable in FEHA cases. Serpa v. 10 California Surety Investigations, Inc., 215 Cal. App. 4th 695, 11 709-10 (2d Dist. 2013). However, this provision “does not 12 vitiate the underlying agreement to arbitrate . . . [because] the 13 arbitration agreement is not otherwise permeated by 14 unconscionability.” Id. Accordingly, the “the offending 15 provision, which is plainly collateral to the main purpose of the 16 contract,” can be severed in conformity with the agreement’s 17 severability clause. Id. The Solution Channel Arbitration 18 Agreement is not “permeated” by unconscionability and is 19 therefore enforceable. The court will grant defendant’s motion 20 to compel arbitration. 21 III. Motion to Dismiss or Stay Judicial Proceedings 22 Because the Solution Channel Arbitration Agreement is 23 enforceable and encompasses plaintiff’s claims, the court will 24 stay this action pending arbitration. See 9 U.S.C. § 3. 25 IT IS THEREFORE ORDERED that defendant’s Motion to 26 Compel (Docket No. 10) be, and the same hereby is, GRANTED. IT 27 IS FURTHER ORDERED that judicial proceedings are STAYED pending 28 arbitration. 1 Dated: December 18, 2019 ’ . 2 i Vin oh 3 UNITED STATES DISTRICT JUDGE 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

Harper v. Charter Communications, LLC, (E.D. Cal. 2019).

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Harper v. Charter Communications, LLC (Harper v. Charter Communications, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.