Jimerson v. SUN Technical Services, Inc.

• Court: District Court, S.D. California
• Decided: June 6, 2025
• Docket: 3:24-cv-01150
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 RASHAD JIMERSON, Case No. 24-cv-1150-BAS-VET

12 Plaintiff, ORDER GRANTING MOTION TO 13 v. COMPEL ARBITRATION AND STAY PROCEEDINGS 14 SUN TECHNICAL SERVICES, LLC;

SOUTHERN CALIFORNIA EDISON 15 (ECF No. 21) COMPANY, INC.; and DOES 1 through

16 10, inclusive, 17 Defendants. 18 19 Before this Court is a motion to compel arbitration of Plaintiff’s wage-and-hour 20 claims and to dismiss his class action claims (“Motion”) filed by Defendant SUN Technical 21 Services, LLC, doing business as BHI Energy Staffing Solutions (“SUN”). (Mot., ECF 22 No. 21.) Defendant Southern California Edison Company, Inc. (“SCE”) joined the Motion 23 (Joinder, ECF No. 22), Plaintiff opposed (Opp’n, ECF No. 25), and Defendant SUN replied 24 (Reply, ECF No. 27). The Court finds the Motion suitable for determination on the papers 25 submitted and without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7.1(d)(1). For 26 the reasons stated below, the Court GRANTS the Motion. 27 28 1 I. BACKGROUND 2 Plaintiff Rashad Jimerson was employed by Defendant SUN and assigned as a 3 Radiation Protection Technician with Defendant SCE. (Second Am. Compl. (“SAC”) ¶¶ 4 11–12, ECF No. 15.) He began his employment in August 2023. (Id. ¶ 11.) On January 5 6, 2024, SUN re-hired Plaintiff and again assigned him as a Radiation Protection 6 Technician with SCE. (Decl. of Leigh Tsukamoto (“Tsukamoto Decl.”) ¶¶ 15–16, ECF 7 No. 21-3.) 8 On May 23, 2024, Plaintiff filed suit against Defendants SUN and SCE in San Diego 9 Superior Court, alleging pervasive violations of California wage-and-hour laws and 10 regulations while Defendants employed Plaintiff as a Radiation Protection Technician. 11 (Compl. ¶¶ 1–10, Ex. A to Notice of Removal (“Removal”), ECF No. 1.) In addition, 12 Plaintiff alleges claims on behalf of a putative class of similarly situated employees 13 premised upon the same factual bases as his wage-and-hour claims. (Id. ¶ 22.) On July 3, 14 2024, Defendant SCE removed the action to this Court, which Defendant SUN 15 subsequently joined. (Removal, ECF No 1; Joinder, ECF No. 9.) 16 Defendant SUN submitted the present Motion on November 18, 2024. (Mot.) 17 Defendant SCE also joined the Motion on November 18, 2024. (Joinder.) Defendants 18 allege that “as a condition of Plaintiff’s employment with SUN, he agreed to arbitrate any 19 employment-related claims, but Plaintiff now refuses to adhere to the terms of the 20 Arbitration Agreements.” (Mot. 3:26–28.) Specifically, Defendants aver that, when 21 Plaintiff completed his employee onboarding process through SUN’s online interface 22 known as “SmartSearch,” Plaintiff agreed (1) to submit any and all claims arising out of or 23 related to his employment to binding arbitration and (2) to waive his right to bring any 24 claims as a plaintiff or class member in any class or representative arbitration proceedings. 25 (Id. 1:3–12.) 26 A. SmartSearch Process 27 As mentioned above, Plaintiff was hired and thereafter re-hired as a Radiation 28 Protection Technician by SUN and assigned to work for SCE in August 2023 and January 1 2024, respectively. (Tsukamoto Decl. ¶¶ 10–16.) According to SUN, during the 2 onboarding process in August 2023, Plaintiff was sent an offer of employment (“Offer”) 3 through SmartSearch, an applicant tracking system. (Id. ¶ 11.) The Offer notes, “By 4 signing this letter, you are agreeing to the enclosed Dispute Resolution Protocol. 5 Please read it carefully.” (Offer 2, Ex. B to Tsukamoto Decl. (emphasis in original).) On 6 the signature page, the Offer provides: 7 I understand that, by agreeing to the dispute resolution protocol, including by agreeing to pursue claims arising from or relating to my employment or 8 termination from employment with [SUN] exclusively in arbitration and on 9 an individual basis, I am giving up important rights to pursue such legal claims on a class or collective basis, before a judge, or in a court of law, and I agree 10 that I have been afforded sufficient time and opportunity to carefully consider 11 these terms and to seek guidance from counsel of my choosing.

12 13 (Id. 3.) Attached to the Offer was the Dispute Resolution Protocol (“Arbitration 14 Agreement”). (Arbitration Agreement, Ex. B to Tsukamoto Decl.) 15 Plaintiff was instructed to electronically sign the Offer and additional onboarding 16 documents through a SmartSign link. (Tsukamoto Decl. ¶ 13.) The SmartSign link is 17 unique and tied to employees’ SmartSearch Profile. (Id. ¶ 9.) To access the onboarding 18 documents, employees must click on the embedded link and create a confidential four-digit 19 PIN. (Id.) After creating their PIN, employees can review, sign, and download their 20 onboarding documents. (Id.) Plaintiff electronically signed the Offer, including the 21 Arbitration Agreement, on August 4, 2023. (Id. ¶ 14.) 22 Plaintiff completed the same process when he was re-hired in January 2024. (Id. ¶¶ 23 16–18.) On January 6, 2024, Plaintiff again electronically signed his Re-Hire Offer, which 24 included an identical Arbitration Agreement. (Id. ¶ 19.) 25 // 26 // 27 // 28 // 1 B. The Arbitration Agreements 2 The Arbitration Agreements state: 3 By accepting employment with [SUN], you acknowledge and agree that any controversy or claim arising out of or relating to your employment or the 4 termination of your employment with [SUN] (which shall include its parents, 5 subsidiaries, divisions and affiliates, and its and their employees, agents, shareholders, directors, officers and representatives) (“Claims”) shall, subject 6 to the terms below, be settled exclusively by binding arbitration. 7 8 (Arbitration Agreement.) 9 Under the Arbitration Agreements, SUN and the prospective employee agree to 10 submit certain claims to arbitration. In pertinent part, the Arbitration Agreements outline 11 these claims to include: 12 [A]ny Claims against [SUN] or [SUN]’s Clients (as defined below) for discrimination, harassment or retaliation, tort Claims, Claims for wages, 13 commissions, bonuses or other compensation due, Claims for actual or 14 constructive wrongful termination, breach of express or implied contract Claims, and all other Claims for violation of any federal, state or local 15 common law, statute, regulation, executive order, or ordinance . . . . 16 17 (Id.) The Arbitration Agreements define “Clients” as: 18 [A]ny entity for which you provide services as part of your employment with [SUN] and to which [SUN] (or [SUN]’s parents, subsidiaries, divisions or 19 affiliates) provides specialty project and maintenance services on a managed 20 task basis or for which [SUN] functions as a staffing supplier or managed service provider offering staff augmentation services. 21 22 (Id.) 23 Further, the Arbitration Agreements require that the prospective employee waive his 24 or her “right to bring any claims as a plaintiff or class member in any class or representative 25 arbitration proceeding.” (Id.) 26 The Arbitration Agreements include a delegation provision (“Delegation Clause”), 27 which reads, “The Arbitrator, and not any federal, state, or local court or agency, shall have 28 1 exclusive authority to resolve any dispute relating to the enforceability or formation of this 2 Agreement and the arbitrability of disputes between the parties.” (Id.) 3 Finally, the Arbitration Agreements incorporate the Employment Arbitration Rules 4 and Mediation Procedures of the American Arbitration Association (“AAA Rules”). (Id.) 5 AAA Rule 6 contains a delegation provision, providing, “The arbitrator shall have the 6 power to rule on his or her own jurisdiction, including any objections with respect to the 7 existence, scope or validity of the arbitration agreement.” (AAA Rules 12, Ex. J to Decl. 8 of Yesi Lagunas, ECF No. 21-4.) 9 II. LEGAL STANDARD 10 The Federal Arbitration Act (“FAA”) applies to contracts involving interstate 11 commerce. 9 U.S.C. §§ 1, 2. If a party is bound to an arbitration agreement that falls 12 within the scope of the FAA, the party may move to compel arbitration in a federal court. 13 Id. §§ 3–4; see also Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 14 (9th Cir. 2004). “Generally, ‘the [FAA] establishes that, as a matter of federal law, any 15 doubts concerning the scope of arbitrable issues should be resolved in favor of 16 arbitration.’” Portland Gen. Elec. Co. v. Liberty Mut. Ins. Co., 862 F.3d 981, 985 (9th Cir. 17 2017) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 18 (1983)). 19 Given this strong federal preference for arbitration and the contractual nature of 20 arbitration agreements, “a district court has little discretion to deny an arbitration motion” 21 once it determines that a claim is covered by a written and enforceable agreement to 22 arbitrate. Republic of Nicar. v. Standard Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991). “In 23 determining whether to compel a party to arbitration, a district court may not review the 24 merits of the dispute[.]” Esquer v. Educ. Mgmt. Corp., 292 F. Supp. 3d 1005, 1010 (S.D. 25 Cal. 2017) (quoting Marriott Ownership Resorts, Inc. v. Flynn, No. 14-00372 JMS-RLP, 26 2014 WL 7076827, at *6 (D. Haw. Dec. 11, 2014)). Instead, a district court’s 27 determinations are limited to (1) whether a valid arbitration agreement exists and, if so, (2) 28 whether the agreement covers the relevant dispute. See 9 U.S.C. § 4; Brennan v. Opus 1 Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) (citing Howsam v. Dean Witter Reynolds, Inc., 2 537 U.S. 79, 84 (2002)). 3 “[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as 4 whether the parties have agreed to arbitrate or whether their agreement covers a particular 5 controversy.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69 (2010) (citing Howsam, 6 537 U.S. at 83–85, and Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (2003) (plurality 7 opinion)). “Courts should not assume that the parties agreed to arbitrate arbitrability unless 8 there is ‘clea[r] and unmistakabl[e]’ evidence that they did so.” First Options of Chi., Inc. 9 v. Kaplan, 514 U.S. 938, 944 (1995) (citing AT&T Techs., Inc. v. Commc’ns Workers of 10 Am., 475 U.S. 643, 649 (1986)); see also Howsam, 537 U.S. at 84 (noting that a gateway 11 dispute about whether the parties are bound by a given arbitration clause raises a question 12 of arbitrability that is presumptively for the court to decide). However, the Supreme Court 13 has “repeatedly held” that “the FAA provides the default rule” that “ambiguities about the 14 scope of an arbitration agreement must be resolved in favor of arbitration.” Lamps Plus, 15 Inc v. Varela, 587 U.S. 176, 189 (2019) (citing Mitsubishi Motors Corp. v. Soler Chrysler- 16 Plymouth, Inc., 473 U.S. 614, 626 (1985), and Moses H. Cone Mem’l Hosp., 460 U.S. at 17 24–25). 18 III. ANALYSIS 19 Defendant SUN now moves to compel arbitration and to dismiss Plaintiff’s class 20 action claims. (Mot.) Defendant SCE seeks to join SUN’s motion as an express, intended 21 third-party beneficiary of the Arbitration Agreements between Plaintiff and SUN. (Joinder 22 3:15–19.) 23 “[N]onsignatories of arbitration agreements may be bound by the agreement under 24 ordinary contract and agency principles.” Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th 25 Cir. 2006) (citing Letizia v. Prudential Bache Secs., Inc., 802 F.2d 1185, 1187–88 (9th Cir. 26 1986)). These principles include incorporation by reference, assumption, agency, veil- 27 piercing or alter ego, and estoppel. Id. (citing Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 28 64 F.3d 773, 776 (2d Cir. 1995)). Nonsignatories can also enforce arbitration agreements 1 as third-party beneficiaries. Id. As discussed above, the Arbitration Agreements cover 2 claims brought against SUN’s clients, defined in pertinent part as “any entity for which 3 you provide services as part of your employment with [SUN] . . . or for which [SUN] 4 functions as a staffing supplier or managed service provider offering staff augmentation 5 services.” (Arbitration Agreement.) Plaintiff provided services as part of his employment 6 with SUN to SCE as SUN functioned as a staffing supplier to SCE. (SAC ¶¶ 11–12.) The 7 Court agrees that SCE is an express third-party beneficiary of the Arbitration Agreements 8 and may join the Motion to Compel Arbitration. 9 Defendants argue that Plaintiff agreed to arbitrate all wage-and-hour claims, 10 including those underlying this action, when he twice signed the Arbitration Agreements 11 in August 2023 and January 2024. (Mot. 1:3–12.) In opposition, Plaintiff argues: (1) the 12 Arbitration Agreements are procedurally and substantively unconscionable (Opp’n 4:8–9); 13 (2) the Delegation Clause does not preclude judicial review of the Arbitration Agreements’ 14 unconscionability (id. 13:15–18); and (3) the unconscionable provisions cannot be severed, 15 rendering the entirety of the Arbitration Agreements unenforceable (id. 14:24–15:4). 16 Plaintiff does not contest that he signed the Arbitration Agreements, that the Agreements 17 cover this dispute, and that the FAA governs the Arbitration Agreements. (See generally 18 Opp’n.) 19 Defendants argue that the Arbitration Agreements are not unconscionable and, 20 moreover, clearly and unmistakably delegate questions of arbitrability, including 21 enforceability and unconscionability, to the arbitrator. (Reply 1:27–2:1, 8:24–9:2.) 22 Because the Court finds that the Arbitration Agreements constitute valid agreements 23 to arbitrate and the Court agrees with Defendants’ interpretation of the Delegation Clause, 24 the Motion is granted. 25 A. Delegation of Arbitrability 26 Given that Plaintiff agreed to the Arbitration Agreements, he also agreed to their 27 Delegation Clause, which provides, “The Arbitrator, and not any federal, state, or local 28 court or agency, shall have exclusive authority to resolve any dispute relating to the 1 enforceability or formation of this Agreement and the arbitrability of disputes between the 2 parties.” (Arbitration Agreement.) Plaintiff contends that the Delegation Clause does not 3 clearly and unmistakably delegate the issue of unconscionability to the arbitrator. (Opp’n 4 14:5–6.) Specifically, Plaintiff argues the Delegation Clause is “buried within a dense, 5 legalistic document and is not presented in a manner that would be readily understandable 6 to a layperson.” (Id. 14:9–10.) Plaintiff also argues that the incorporation of the AAA 7 Rules by reference without providing a copy to Plaintiff undermines the Delegation 8 Clause’s clarity and unmistakability. (Id. 14:17–21.) 9 The determination of whether an arbitration agreement is valid, applicable, and 10 enforceable is reserved to the court unless “the parties clearly and unmistakably provide[d] 11 otherwise,” such as by delegating the issue of arbitrability to arbitration. AT&T Techs., 12 475 U.S. at 649. Further, a court “need not reference extrinsic materials” where the 13 arbitration agreement “facially gives an arbitrator the exclusive authority to determine his 14 or her own jurisdiction.” Anderson v. Pitney Bowes, Inc., No. 04-cv-4808 SBA, 2005 WL 15 1048700, at *3 (N.D. Cal. May 4, 2005). Indeed, “[w]hen the contractual language is clear, 16 there is no need to consider extrinsic evidence of the parties’ intentions; the clear language 17 of the agreement governs.” Han v. Synergy Homecare Franchising LLC, 16-cv-3759- 18 KAW, 2017 WL 446881, at *7 (N.D. Cal. 2017) (citing EFund Cap. Partners v. Pless, 150 19 Cal. App. 4th 1311, 1322 (2007)). 20 As mentioned above, the Delegation Clause provides that “any dispute relating to 21 the enforceability or formation of this Agreement and the arbitrability of disputes between 22 the parties” must be resolved through binding arbitration before the AAA. (Arbitration 23 Agreement.) As Defendants correctly note, questions of arbitrability, enforceability, and 24 formation include “gateway dispute[s] about whether the parties are bound by a given 25 arbitration clause” or “whether an arbitration clause . . . applies to a particular type of 26 controversy.” Howsam, 537 U.S. at 84; see also Yu v. Volt Info. Sci., Inc., No. 19-cv- 27 01981-LB, 2019 WL 3503111, at *7 (N.D. Cal. Aug. 1, 2019) (holding that procedural 28 unconscionability is a “question of arbitrability”); Maharaj v. Charter Commc’ns, Inc., No. 1 20-cv-00064-BAS-LL, 2021 WL 5014352, at *9 (S.D. Cal. Oct. 27, 2021) (holding that 2 gateway arbitrability issues include unconscionability). 3 The Court finds that the Delegation Clause clearly and unmistakably indicates that 4 the parties intended to arbitrate all gateway arbitrability issues, including 5 unconscionability. See Rent-A-Ctr., 561 U.S. at 71–73 (determining that the delegation 6 clause clearly and unmistakably delegated unconscionability disputes to the arbitrator as 7 relating to the “enforceability” of the agreement). “An arbitration provision that explicitly 8 refers arbitrability questions to an arbitrator is evidence that the parties clearly and 9 unmistakably have referred the arbitrability question to the arbitrator.” Loewen v. Lyft, 10 Inc., 129 F. Supp. 3d 945, 954 (N.D. Cal. 2015). The Delegation Clause meets this 11 standard. (See Arbitration Agreement.) 12 Further, the Court rejects Plaintiff’s argument that the incorporation of the AAA 13 Rules by reference undermines the clarity and unmistakability of the Delegation Clause. 14 Because the Delegation Clause itself is clear, the Arbitration Agreements clearly and 15 unmistakably delegate arbitrability, and there is no reason to consider the AAA Rules. See 16 Han, 2017 WL 446881, at *7 (citing EFund Cap. Partners, 150 Cal. App. 4th at 1322). 17 B. The Delegation Clause Is Not Unconscionable 18 Plaintiff contends that the Arbitration Agreements’ provisions, including the 19 Delegation Clause, are nevertheless unenforceable because they are unconscionable. 20 (Opp’n 4:8–9.) Defendants argue that the Delegation Clause delegates questions of 21 arbitrability, including unconscionability, and that this Court should not address 22 unconscionability in light of the delegation of arbitrability. (Reply 8:24–9:2.) Further, 23 Defendants assert that even if the Court considers the unconscionability argument, it fails. 24 (Id. 1:15–16.) 25 “[E]ven where there is clear and unmistakable evidence of an intent to delegate 26 questions of arbitrability to the arbitrator, the enforceability of the delegation provision 27 itself is a separate, threshold issue” for a court to determine. Loewen, 129 F. Supp. 3d at 28 955 (citing Rent-A-Ctr., 561 U.S. at 70–71). Where the delegation clause itself is 1 unconscionable or otherwise unenforceable under an arbitration agreement, a court may 2 decline to enforce it. Meadows v. Dickey’s Barbecue Rests. Inc., 144 F. Supp. 3d 1069, 3 1079 (N.D. Cal. 2015) (citing Brennan, 796 F.3d at 1132). 4 Accordingly, the Court will assess the unconscionability of the Delegation Clause, 5 considering only arguments “specific to the delegation provision.” See Rent-A-Ctr., 561 6 U.S. at 73. “[T]o sufficiently challenge a delegation provision, the party resisting 7 arbitration must specifically reference the delegation provision and make arguments 8 challenging it . . . . [A] party may use the same arguments to challenge both the delegation 9 provision and arbitration agreement, so long as the party articulates why the argument 10 invalidates each specific provision.” Bielski v. Coinbase, Inc., 87 F.4th 1003, 1011 (9th 11 Cir. 2023); see also Rent-A-Ctr., 561 U.S. at 73; Holley-Gallegly v. TA Operating, LLC, 12 74 F.4th 997, 1002 (9th Cir. 2023); Kohler v. Whaleco, Inc., 757 F. Supp. 3d 1112, 1127 13 (S.D. Cal. 2024). 14 1. California Law on Unconscionability 15 The parties agree that the Court should apply California law to assess whether the 16 Delegation Clause is unconscionable. (Mot. 20:17–18; Opp’n 3:25–26.) Under California 17 law, unconscionable contracts are those that are “so one-sided as to shock the conscience.” 18 Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1244 (2016). Finding that a contract is 19 unenforceable on grounds of unconscionability requires a substantial degree of unfairness 20 beyond “a simple old-fashioned bad bargain.” Id. “[U]nconscionability has both a 21 ‘procedural’ and a ‘substantive’ element, the former focusing on ‘oppression’ or ‘surprise’ 22 due to unequal bargaining power, the latter on ‘overly harsh’ or ‘one-sided’ results.” 23 Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1210 (9th Cir. 2016) (citing Armendariz v. 24 Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 88 (2000)). Both procedural and 25 substantive unconscionability must be present in order for a court to find a contract 26 unconscionable, but “they need not be present in the same degree.” Id. Plaintiff argues 27 that both elements are present. (Opp’n 1:4–6.) 28 1 2. Procedural Unconscionability 2 Procedural unconscionability focuses on “oppression” or “surprise.” “Oppression 3 arises from an inequality of bargaining power that results in no real negotiation and an 4 absence of meaningful choice. Surprise involves the extent to which the supposedly 5 agreed-upon terms are hidden in a prolix printed form drafted by the party seeking to 6 enforce them.” Flores v. Transamerica HomeFirst, Inc., 93 Cal. App. 4th 846, 853 (2001). 7 Plaintiff contends that the arbitration provisions are procedurally unconscionable 8 because (1) the Arbitration Agreements were adhesion contracts, which Plaintiff had no 9 meaningful opportunity to negotiate, and (2) the Arbitration Agreements contained 10 complex legal language, and key rules and provisions were not sufficiently conspicuous. 11 (Opp’n 8:3–7.) 12 i. Plaintiff Has Shown Oppression 13 The Court considers Plaintiff’s first argument as an argument about oppression. 14 “The threshold inquiry in California’s unconscionability analysis is ‘whether the arbitration 15 agreement is adhesive.’” Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1281 (9th Cir. 16 2006) (en banc) (quoting Armendariz, 24 Cal. 4th at 114). 17 A contract of adhesion is defined as a “standardized contract, imposed upon the 18 subscribing party without an opportunity to negotiate the terms.” Flores, 93 Cal. App. 4th 19 at 853. A finding that a contract is one of adhesion is essentially a finding of procedural 20 unconscionability. Id. This is because when the weaker party is presented with a clause 21 and told to “take it or leave it” without the opportunity for meaningful negotiation, 22 oppression, and therefore procedural unconscionability, are present. Szetela v. Discover 23 Bank, 97 Cal. App. 4th 1094, 1100 (2002). However, the fact that a contract is adhesive is 24 insufficient by itself to render an arbitration clause unenforceable. Newton v. Am. Debt 25 Servs., 854 F. Supp. 2d 712, 723 (N.D. Cal. 2012). 26 The Court agrees that the Arbitration Agreements, which include the Delegation 27 Clause, are contracts of adhesion. The Arbitration Agreements are standard form contracts 28 presented to individuals hired by SUN. (Tsukamoto Decl. ¶¶ 11, 16.) The Arbitration 1 Agreements were prepared by SUN and presented to Plaintiff as a condition of 2 employment. (Id.) There is no indication that Plaintiff had any “equality of bargaining 3 power” with SUN so that he could negotiate the terms of the Arbitration Agreements, 4 including the inclusion of the Delegation Clause. For these reasons, Plaintiff’s challenge 5 to the Delegation Clause as procedurally unconscionable on the ground that it is part of an 6 adhesion contract has merit. See Tiri v. Lucky Chances, Inc., 226 Cal. App. 4th 231, 245– 7 46 (2014) (“For the same reasons that we conclude the delegation clause is part of a contract 8 of adhesion . . . [it] is procedurally unconscionable.”). Even so, use of an adhesion contract 9 establishes only some degree of procedural unconscionability and is not itself a ground for 10 finding that a contract, or one of its provisions, is unenforceable. See Sanchez v. Valencia 11 Holding Co., LLC, 61 Cal. 4th 899, 915 (2015). 12 ii. Plaintiff Has Not Shown Surprise 13 The Court deems Plaintiff’s second argument as an argument about unfair surprise 14 but disagrees that there is any element of surprise. Specific to the Delegation Clause, 15 Plaintiff challenges that the Delegation Clause uses complex and legalistic language and 16 was not sufficiently conspicuous. (Opp’n 6:10–7:13); see Bielski, 87 F.4th at 1011 (“[T]o 17 sufficiently challenge a delegation provision, the party resisting arbitration must 18 specifically reference the delegation provision and make arguments challenging it[.]”). 19 Surprise “involves the extent to which the supposedly agreed-upon terms of the 20 bargain are hidden in a prolix printed form drafted by the party seeking to enforce the 21 disputed terms.” A&M Produce Co. v. FMC Corp., 135 Cal. App. 3d 473, 486 (1982); see 22 also Ingle v. Circuit City Stores, Inc., 382 F.3d 1165, 1171 (9th Cir. 2003) (same). The 23 element of surprise must be balanced against the fact that a party is not under an obligation 24 to highlight an arbitration agreement, including the delegation clause, nor is it required to 25 specifically call that clause to a plaintiff’s attention. See Sanchez, 61 Cal. 4th at 914. 26 The Arbitration Agreements, including the Delegation Clause, were contained on 27 the fourth page of Plaintiff’s Offer and Re-Hire Offer. (Tsukamoto Decl. Ex. B.) The top 28 of the second page of the Offer notes, in bold, “By signing this letter, you are agreeing 1 to the enclosed Dispute Resolution Protocol. Please read it carefully.” (Offer 2 2 (emphasis in original).) On the same page, the letter states, “This offer of employment is 3 contingent upon . . . your agreement to the enclosed Dispute Resolution Protocol.” (Id.) 4 The top of the third page of the Offer affirms, “My signature below signifies that I received, 5 read, understand and agree to the terms of this offer letter, including the dispute resolution 6 protocol enclosed herewith.” (Id. 3.) Finally, the third page of the Offer also states: 7 I understand that, by agreeing to the dispute resolution protocol, including by agreeing to pursue claims arising from or relating to my employment or 8 termination from employment with [SUN] exclusively in arbitration and on 9 an individual basis, I am giving up important rights to pursue such legal claims on a class or collective basis, before a judge, or in a court of law, and I agree 10 that I have been afforded sufficient time and opportunity to carefully consider 11 these terms and to seek guidance from counsel of my choosing.

12 13 (Id.) The Arbitration Agreements attached to the Offer and Re-Hire Offer are merely one 14 page long and written in legible font and size. (Arbitration Agreement.) Plaintiff was sent 15 the Arbitration Agreement twice and signed it twice. (Tsukamoto Decl. ¶¶ 14, 19.) 16 Where the arbitration provisions presented in an adhesion contract are highlighted 17 for the employee, any procedural unconscionability is “limited.” Roman v. Super. Ct., 172 18 Cal. App. 4th 1462, 1470–71 (2009) (finding limited procedural unfairness where the 19 arbitration agreement “was contained on the last page of a seven-page employment 20 application, underneath the heading ‘Please Read Carefully . . .’”); see also Serafin v. Balco 21 Props. Ltd., LLC, 235 Cal. App. 4th 165, 174–80 (2015) (finding “a minimal degree of 22 procedural unconscionability” from a two-page contract of adhesion that unquestionably 23 highlighted the arbitration provisions). Here, the Arbitration Agreements were not buried 24 in a lengthy employment contract. Rather, they were contained on the last page of a four- 25 page employment offer following multiple references to the Arbitration Agreements, both 26 explaining the Agreements’ importance and instructing Plaintiff to carefully read the 27 Agreements. (Offer.) Plaintiff’s arguments that the Arbitration Agreements and 28 Delegation Clause are unclear and inconspicuous are not persuasive. 1 Plaintiff fails to identify how the remainder of his procedural unconscionability 2 arguments, namely his challenge to the incorporation of the AAA rules by reference, make 3 the Delegation Clause unconscionable. See Holley-Gallegly, 74 F.4th at 1002 (“[I]f a party 4 cites provisions outside of the delegation clause in making an unconscionability challenge, 5 it must explain how those provisions make the fact of an arbitrator deciding arbitrability 6 unconscionable.” (emphasis in original)). Based on these facts, the Court finds that there 7 is no element of surprise as to the Arbitration Agreements and the Delegation Clause. 8 3. Substantive Unconscionability 9 Plaintiff contends that the Arbitration Agreements are substantively unconscionable 10 because (1) the Agreements create a unilateral reservation of certain rights for SUN, (2) 11 the fee-sharing provision may potentially deter employees from pursuing claims, (3) the 12 class action waiver undermines the enforcement of statutory rights, and (4) the Agreements 13 attempt to shorten the limitations period by imposing Massachusetts law. (Opp’n 8:13– 14 13:12.) The substantive unconscionability inquiry focuses on “the effects of the contractual 15 terms and whether they are overly harsh or one-sided.” Flores, 93 Cal. App. 4th at 853. 16 “A party is . . . permitted under Rent-A-Center to challenge the enforceability of a 17 delegation clause by explaining how ‘unrelated’ provisions make the delegation 18 unconscionable.” Heckman v. Live Nation Ent., Inc., 120 F.4th 670, 680–81 (9th Cir. 2024) 19 (quoting Holley-Gallegly, 74 F.4th at 1002). “[I]f a party cites provisions outside of the 20 delegation clause in making an unconscionability challenge, it must explain how those 21 provisions make the fact of an arbitrator deciding arbitrability unconscionable.” Holley- 22 Gallegly, 74 F.4th at 1002 (emphasis in original). Plaintiff fails to make any arguments 23 that the Delegation Clause specifically is substantively unconscionable. (See generally 24 Opp’n.) Moreover, Plaintiff has not satisfied his burden of explaining how the unilateral 25 reservation of certain rights, fee-sharing provision, class action waiver, and imposition of 26 Massachusetts law make the fact of an arbitrator deciding arbitrability unconscionable, or 27 why an arbitrator cannot determine if these provisions together are unconscionable. (See 28 1 generally id.) In sum, the Court does not find the Delegation Clause substantively 2 unconscionable. 3 4. Plaintiff Has Not Proven the Delegation Clause Is Unenforceable 4 Although Plaintiff has shown some degree of procedural unconscionability as to the 5 Delegation Clause, he has failed to establish that the provision is substantively 6 unconscionable. Because California law requires a showing of both types of 7 unconscionability, Mohamed, 848 F.3d at 1210; Armendariz, 24 Cal. 4th at 114, Plaintiff 8 has failed to meet his burden to show that the Delegation Clause is unenforceable. 9 Accordingly, the Court will enforce the delegation provision. 10 C. Stay and Dismissal 11 Defendants ask this Court to dismiss Plaintiff’s putative class action claims. (Mot. 12 25:7–9.) Under the FAA, where, as here, a court “determines that all of the claims raised 13 in the action are subject to arbitration,” the court may either “stay the action or dismiss it 14 outright.” See Johnmohammadi v. Bloomingdale’s Inc., 755 F.3d 1072, 1074 (9th Cir. 15 2014). “The Ninth Circuit has suggested, without expressly holding, that a class 16 encompassing members with valid arbitration agreements and others not subject to the 17 arbitration agreements cannot be certified.” Berman v. Freedom Fin. Network, LLC, 400 18 F. Supp. 3d 964, 986 (N.D. Cal. 2019) (citing O’Connor v. Uber Techs., Inc., 904 F.3d 19 1087, 1094 (9th Cir. 2018)). Given this Court’s decision to grant Defendants’ request to 20 compel arbitration, Plaintiff cannot continue to serve as class representative of the putative 21 class. 22 Accordingly, the Court dismisses Plaintiff’s putative class action claims but without 23 prejudice. Plaintiff’s inadequacy as a class representative does not speak to the merits of 24 the class claims. 25 IV. CONCLUSION 26 In light of the foregoing, the Court GRANTS Defendants’ Motion. (ECF No. 21.) 27 Specifically, the Court ORDERS the parties to proceed to arbitration with the claims 28 pressed in the Complaint in the manner provided for in the Arbitration Agreements; 1 || DISMISSES without prejudice Plaintiff's putative class action claims; and STAYS this 2 || action. 3 The Court directs the Clerk of Court to ADMINISTRATIVELY CLOSE this case. 4 || The decision to administratively close this case pending resolution of the arbitration does 5 ||not have any jurisdictional effect. See Dees v. Billy, 394 F.3d 1290, 1294 (9th Cir. 2005) 6 ||(“[A] district court order staying judicial proceedings and compelling arbitration is not 7 || appealable even if accompanied by an administrative closing. An order administratively 8 closing a case is a docket management tool that has no jurisdictional effect.”). 9 IT IS SO ORDERED. 10 11 ||DATED: June 6, 2025 (pallu Bahar ke 2 H n. Cynthia Bashant, Chief Judge United States District Court 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1K.