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8 United States District Court 9 Central District of California
11 JOHNATHON ERVIN, Case № 2:24-cv-10311-ODW (KSx)
12 Plaintiff, ORDER GRANTING
13 v. DEFENDANTS’ MOTION TO COMPEL ARBITRATION [23] 14 AMAZON.COM SERVICES, LLC et al.,
15 Defendants.
16 17 I. INTRODUCTION 18 Defendants Amazon Services, LLC, Amazon.com, Inc., Amazon Logistics, Inc., 19 Golden State FC, LLC, Amazon Fulfillment Services, Inc., and Kim Herzog 20 (collectively, “Amazon”) move to compel Plaintiff Johnathon Ervin to arbitrate his 21 claims against them and stay this action. (Mot. Compel Arb. (“Mot.” or “Motion”), 22 ECF No. 23.) For the following reasons, the Court GRANTS Amazon’s Motion.1 23 II. BACKGROUND 24 On August 22, 2019, Ervin’s business—Battle Tested Strategies, LLC 25 (“BTS”)—executed a Delivery Service Partner (“DSP”) Agreement with Amazon that 26 governed “the transportation, delivery, and related services . . . performed by [BTS].” 27
28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 (Mot. 1, 3; Decl. Micah McCabe ISO Mot. (“McCabe Decl.”) ¶¶ 6, 8, Ex. A (“DSP 2 Agreement”), ECF Nos. 23-2 to 23-3.) Ervin signed the agreement on behalf of BTS. 3 (McCabe Decl. ¶ 7.) Thereafter, Ervin managed the drivers that BTS employed who 4 delivered Amazon’s products. (Notice Removal Ex. A (“Compl.”) ¶ 13a, ECF No. 1-1; 5 McCabe Decl. ¶ 9.) Ervin contends that he was Amazon’s employee and that Amazon 6 improperly classified him as an independent contractor. (Compl. ¶ 13a; see Opp’n 8, 7 ECF No. 28 (“[Ervin] was hired to manage [BTS drivers] by [Amazon].”).) 8 Relevant here, the DSP Agreement between Amazon and BTS contains an 9 arbitration provision that states as follows: 10 This Agreement is governed by the United States Federal Arbitration Act, applicable United States federal law, and Washington State law . . . . ANY 11 DISPUTE ARISING OUT OF THIS AGREEMENT WILL BE 12 RESOLVED BY BINDING ARBITRATION, RATHER THAN IN 13 COURT. . . . The arbitration will be conducted by the American Arbitration Association (the “AAA”) under its rules, including the AAA’s 14 Commercial Arbitration Rules. The AAA’s rules are available at 15 www.adr.org or by calling 1-800-778-7879. 16 (DSP Agreement ¶ 13.) The parties revised the DSP Agreement two times, but never 17 altered the arbitration provision. (McCabe Decl. ¶ 8; see also id. Ex. 3 (“Am. DSP 18 Agreement”), ECF No. 23-4.) 19 On September 11, 2019, Ervin and BTS entered into a “Mutual Agreement to 20 Individually Arbitrate Disputes” (the “DA Agreement”) with each other. (Decl. Alexis 21 Cantwell-Badyna ISO Mot. (“Cantwell-Badyna Decl.”) ¶¶ 5, 7, Ex. A (“DA 22 Agreement”), ECF Nos. 23-6 to 23-7.) 23 On April 14, 2023, more than three-and-a-half years after executing the DSP 24 Agreement, Amazon notified Ervin that it was terminating the DSP Agreement. (See 25 Compl. ¶ 17a; McCabe Decl. ¶ 10, Ex. C (“Termination Notice”), ECF No. 23-5.) 26 On October 21, 2024, following the termination, Ervin brought this action against 27 Amazon in Los Angeles County Superior Court asserting claims for violations of 28 California’s Fair Employment and Housing Act (“FEHA”), whistleblower retaliation, 1 wrongful termination in violation of public policy, and intentional infliction of 2 emotional distress. (Compl. ¶¶ 23–70.) On November 27, 2024, Amazon removed the 3 action to this Court based on diversity jurisdiction. (Notice Removal, ECF No. 1.) 4 Amazon now moves to compel arbitration and stay this action on the grounds that 5 Ervin agreed to arbitrate his claims when he signed the DSP Agreement with Amazon 6 in his capacity as owner and agent of BTS. (Mot.; Mem. P. & A. ISO Mot. (“Mem.”) 6– 7 12, ECF No. 23-1.) Amazon also argues that it may compel arbitration under the DA 8 Agreement, as it is a third-party beneficiary of that agreement. (Id. at 12–20.) The 9 Motion is fully briefed. (See Opp’n; Reply, ECF No. 29.) 10 III. LEGAL STANDARD 11 The Federal Arbitration Act (“FAA”) is meant to “ensur[e] that private arbitration 12 agreements are enforced according to their terms.” AT&T Mobility LLC v. Concepcion, 13 563 U.S. 333, 344 (2011) (alteration in original). Section 2 of the FAA creates a policy 14 favoring enforcement, stating that arbitration clauses in contracts “shall be valid, 15 irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the 16 revocation of any contract.” Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 17 (9th Cir. 2008) (quoting 9 U.S.C. § 2). Under the FAA, a party to such an agreement 18 may petition an appropriate federal district court to compel arbitration. 9 U.S.C. § 4. 19 The FAA governs a contract dispute relating to an arbitration provision if the 20 contract affects interstate commerce. Allied-Bruce Terminix Cos., Inc. v. Dobson, 21 513 U.S. 265, 273–74 (1995). When it applies, the FAA restricts a court’s arbitration 22 inquiry to two threshold questions: (1) whether there was an agreement to arbitrate 23 between the parties; and (2) whether the agreement covers the dispute. Cox, 533 F.3d 24 at 1119. A delegation provision further limits a court’s review by assigning these 25 gateway questions to an arbitrator. Bielski v. Coinbase, Inc., 87 F.4th 1003, 1009 26 (9th Cir. 2023). If an arbitration agreement contains a delegation provision, a party 27 opposing arbitration must specifically challenge the delegation provision. Rent-A- 28 Center, West, Inc. v. Jackson, 561 U.S. 63, 72 (2010). If the party fails to do so, a court 1 must treat the provision as valid, order arbitration and leave “any challenge to the 2 validity of the Agreement as a whole for the arbitrator.” Id. 3 IV. DISCUSSION2 4 Amazon seeks to compel Ervin to resolve his claims through arbitration based on 5 the DSP Agreement and the DA Agreement. (See Mem.) Amazon also contends that 6 because the DSP Agreement and the DA Agreement each invoke and incorporate the 7 AAA and its rules, the agreements delegate any arbitrability dispute to an arbitrator. 8 (Id. at 5.) 9 Ervin argues that Amazon cannot compel arbitration under the FAA because 10 Ervin falls within the FAA’s transportation worker exemption pursuant to 9 U.S.C. § 1. 11 (Id. at 5–7.) Ervin also contends that, under California law, the parties’ agreement to 12 arbitrate is unenforceable because Amazon should have classified Ervin as an employee 13 and not as an independent contractor. (Id. at 7–11.) In so arguing, Ervin attacks the 14 DSP Agreement’s arbitration clause as substantively unconscionable, arguing that it 15 would diminish his statutory rights because it contains an overly-burdensome forum 16 selection and choice-of-law provision. (Id. at 9–10.)3 17 A. Whether Ervin is Bound by the DSP Agreement 18 Ervin brings this action against Amazon in his individual capacity and not on 19 behalf of BTS. (See generally Compl.) Even though Ervin did not sign an arbitration 20 agreement with Amazon in his individual capacity, Amazon argues that “principles of 21 agency and estoppel require enforcement of the DSP Agreement” against Ervin, who 22 signed the agreement on behalf of BTS, as its owner. (Mem. 8–9; see DSP Agreement).
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O 1
2 3 4 5 6 7
8 United States District Court 9 Central District of California
11 JOHNATHON ERVIN, Case № 2:24-cv-10311-ODW (KSx)
12 Plaintiff, ORDER GRANTING
13 v. DEFENDANTS’ MOTION TO COMPEL ARBITRATION [23] 14 AMAZON.COM SERVICES, LLC et al.,
15 Defendants.
16 17 I. INTRODUCTION 18 Defendants Amazon Services, LLC, Amazon.com, Inc., Amazon Logistics, Inc., 19 Golden State FC, LLC, Amazon Fulfillment Services, Inc., and Kim Herzog 20 (collectively, “Amazon”) move to compel Plaintiff Johnathon Ervin to arbitrate his 21 claims against them and stay this action. (Mot. Compel Arb. (“Mot.” or “Motion”), 22 ECF No. 23.) For the following reasons, the Court GRANTS Amazon’s Motion.1 23 II. BACKGROUND 24 On August 22, 2019, Ervin’s business—Battle Tested Strategies, LLC 25 (“BTS”)—executed a Delivery Service Partner (“DSP”) Agreement with Amazon that 26 governed “the transportation, delivery, and related services . . . performed by [BTS].” 27
28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 (Mot. 1, 3; Decl. Micah McCabe ISO Mot. (“McCabe Decl.”) ¶¶ 6, 8, Ex. A (“DSP 2 Agreement”), ECF Nos. 23-2 to 23-3.) Ervin signed the agreement on behalf of BTS. 3 (McCabe Decl. ¶ 7.) Thereafter, Ervin managed the drivers that BTS employed who 4 delivered Amazon’s products. (Notice Removal Ex. A (“Compl.”) ¶ 13a, ECF No. 1-1; 5 McCabe Decl. ¶ 9.) Ervin contends that he was Amazon’s employee and that Amazon 6 improperly classified him as an independent contractor. (Compl. ¶ 13a; see Opp’n 8, 7 ECF No. 28 (“[Ervin] was hired to manage [BTS drivers] by [Amazon].”).) 8 Relevant here, the DSP Agreement between Amazon and BTS contains an 9 arbitration provision that states as follows: 10 This Agreement is governed by the United States Federal Arbitration Act, applicable United States federal law, and Washington State law . . . . ANY 11 DISPUTE ARISING OUT OF THIS AGREEMENT WILL BE 12 RESOLVED BY BINDING ARBITRATION, RATHER THAN IN 13 COURT. . . . The arbitration will be conducted by the American Arbitration Association (the “AAA”) under its rules, including the AAA’s 14 Commercial Arbitration Rules. The AAA’s rules are available at 15 www.adr.org or by calling 1-800-778-7879. 16 (DSP Agreement ¶ 13.) The parties revised the DSP Agreement two times, but never 17 altered the arbitration provision. (McCabe Decl. ¶ 8; see also id. Ex. 3 (“Am. DSP 18 Agreement”), ECF No. 23-4.) 19 On September 11, 2019, Ervin and BTS entered into a “Mutual Agreement to 20 Individually Arbitrate Disputes” (the “DA Agreement”) with each other. (Decl. Alexis 21 Cantwell-Badyna ISO Mot. (“Cantwell-Badyna Decl.”) ¶¶ 5, 7, Ex. A (“DA 22 Agreement”), ECF Nos. 23-6 to 23-7.) 23 On April 14, 2023, more than three-and-a-half years after executing the DSP 24 Agreement, Amazon notified Ervin that it was terminating the DSP Agreement. (See 25 Compl. ¶ 17a; McCabe Decl. ¶ 10, Ex. C (“Termination Notice”), ECF No. 23-5.) 26 On October 21, 2024, following the termination, Ervin brought this action against 27 Amazon in Los Angeles County Superior Court asserting claims for violations of 28 California’s Fair Employment and Housing Act (“FEHA”), whistleblower retaliation, 1 wrongful termination in violation of public policy, and intentional infliction of 2 emotional distress. (Compl. ¶¶ 23–70.) On November 27, 2024, Amazon removed the 3 action to this Court based on diversity jurisdiction. (Notice Removal, ECF No. 1.) 4 Amazon now moves to compel arbitration and stay this action on the grounds that 5 Ervin agreed to arbitrate his claims when he signed the DSP Agreement with Amazon 6 in his capacity as owner and agent of BTS. (Mot.; Mem. P. & A. ISO Mot. (“Mem.”) 6– 7 12, ECF No. 23-1.) Amazon also argues that it may compel arbitration under the DA 8 Agreement, as it is a third-party beneficiary of that agreement. (Id. at 12–20.) The 9 Motion is fully briefed. (See Opp’n; Reply, ECF No. 29.) 10 III. LEGAL STANDARD 11 The Federal Arbitration Act (“FAA”) is meant to “ensur[e] that private arbitration 12 agreements are enforced according to their terms.” AT&T Mobility LLC v. Concepcion, 13 563 U.S. 333, 344 (2011) (alteration in original). Section 2 of the FAA creates a policy 14 favoring enforcement, stating that arbitration clauses in contracts “shall be valid, 15 irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the 16 revocation of any contract.” Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 17 (9th Cir. 2008) (quoting 9 U.S.C. § 2). Under the FAA, a party to such an agreement 18 may petition an appropriate federal district court to compel arbitration. 9 U.S.C. § 4. 19 The FAA governs a contract dispute relating to an arbitration provision if the 20 contract affects interstate commerce. Allied-Bruce Terminix Cos., Inc. v. Dobson, 21 513 U.S. 265, 273–74 (1995). When it applies, the FAA restricts a court’s arbitration 22 inquiry to two threshold questions: (1) whether there was an agreement to arbitrate 23 between the parties; and (2) whether the agreement covers the dispute. Cox, 533 F.3d 24 at 1119. A delegation provision further limits a court’s review by assigning these 25 gateway questions to an arbitrator. Bielski v. Coinbase, Inc., 87 F.4th 1003, 1009 26 (9th Cir. 2023). If an arbitration agreement contains a delegation provision, a party 27 opposing arbitration must specifically challenge the delegation provision. Rent-A- 28 Center, West, Inc. v. Jackson, 561 U.S. 63, 72 (2010). If the party fails to do so, a court 1 must treat the provision as valid, order arbitration and leave “any challenge to the 2 validity of the Agreement as a whole for the arbitrator.” Id. 3 IV. DISCUSSION2 4 Amazon seeks to compel Ervin to resolve his claims through arbitration based on 5 the DSP Agreement and the DA Agreement. (See Mem.) Amazon also contends that 6 because the DSP Agreement and the DA Agreement each invoke and incorporate the 7 AAA and its rules, the agreements delegate any arbitrability dispute to an arbitrator. 8 (Id. at 5.) 9 Ervin argues that Amazon cannot compel arbitration under the FAA because 10 Ervin falls within the FAA’s transportation worker exemption pursuant to 9 U.S.C. § 1. 11 (Id. at 5–7.) Ervin also contends that, under California law, the parties’ agreement to 12 arbitrate is unenforceable because Amazon should have classified Ervin as an employee 13 and not as an independent contractor. (Id. at 7–11.) In so arguing, Ervin attacks the 14 DSP Agreement’s arbitration clause as substantively unconscionable, arguing that it 15 would diminish his statutory rights because it contains an overly-burdensome forum 16 selection and choice-of-law provision. (Id. at 9–10.)3 17 A. Whether Ervin is Bound by the DSP Agreement 18 Ervin brings this action against Amazon in his individual capacity and not on 19 behalf of BTS. (See generally Compl.) Even though Ervin did not sign an arbitration 20 agreement with Amazon in his individual capacity, Amazon argues that “principles of 21 agency and estoppel require enforcement of the DSP Agreement” against Ervin, who 22 signed the agreement on behalf of BTS, as its owner. (Mem. 8–9; see DSP Agreement). 23 2 Amazon asks the Court to take judicial notice of orders from other courts. (Req. Judicial Notice, 24 ECF No. 30.) As these are judicial records from other cases, the Court GRANTS Amazon’s request. 25 Fed. R. Evid. 201; Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1113 (C.D. Cal. 2003) (“[C]ourt orders and filings are the type of documents that are properly noticed under [Fed. R. 26 Evid. 201(b)].”). 3 Ervin also argues that, in the DA Agreement, he and BTS did not unmistakably delegate the issue of 27 arbitrability to an arbitrator. (Opp’n 11–13.) However, the Court need not reach this argument—or 28 the enforceability of the DA Agreement generally—as it finds that the DSP Agreement compels arbitration here. 1 A party may enforce an arbitration agreement against a nonsignatory through principles 2 of agency and equitable estoppel. See Comer v. Micor, Inc., 436 F.3d 1098, 1101 3 (9th Cir. 2006) (discussing principle of equitable estoppel); Murphy v. DirecTV, Inc., 4 724 F.3d 1218, 1232 (9th Cir. 2013) (explaining that nonsignatory of agreement may 5 be required to arbitrate “if a preexisting confidential relationship, such as an agency 6 relationship between the nonsignatory and one of the parties to the arbitration 7 agreement, makes it equitable to impose the duty to arbitrate upon the nonsignatory”). 8 Ervin does not dispute, and indeed concedes, that he “reviewed and was bound by the 9 DSP Agreement.” (Decl. Jonathon Ervin ISO Opp’n (“Ervin Decl.”) ¶ 6, ECF 10 No. 28-1; see also Reply 2 (“[Ervin] acknowledges that the DSP Agreement is binding 11 on him.”).) Accordingly, the Court accepts Ervin’s declaration that he is bound by the 12 DSP Agreement and finds that Ervin is bound by the agreement’s arbitration clause.4 13 B. Section 1 of the FAA—Transportation Worker Exemption 14 As Ervin is bound by the agreement to arbitrate, the Court turns to Ervin’s 15 argument that he is exempt from mandatory arbitration as a transportation worker under 16 section 1 of the FAA. (Opp’n 5–9.) Specifically, Ervin argues that because he 17 personally effectuated the movement of Amazon’s goods in interstate commerce and 18 brings this action individually under California labor laws, the FAA’s transportation 19 worker exemption applies to him. (Id. at 6, 8.) Amazon argues that Ervin is not subject 20 to section 1 of the FAA because the DSP Agreement between Amazon and BTS is a 21 commercial contract between business entities and not a contract for employment. 22 (Reply 2–3.) 23 24 4 Even had Ervin not explicitly conceded that he is bound by the DSP Agreement, he makes no effort 25 to dispute Amazon’s arguments that he is bound under agency and estoppel principles. (See Opp’n.) Thus, any argument that Ervin, as BTS’s owner, is not bound by the DSP Agreement’s arbitration 26 clause is waived. See John-Charles v. California, 646 F.3d 1243, 1247 n.4 (9th Cir. 2011) (deeming issue waived where the party “failed to develop any argument”); Stichting Pensioenfonds ABP v. 27 Countrywide Fin. Corp., 802 F. Supp. 2d 1125, 1132 (C.D. Cal. 2011) (“[I]n most circumstances, 28 failure to respond in an opposition brief to an argument put forward in an opening brief constitutes waiver or abandonment in regard to the uncontested issue.”). 1 The Supreme Court has held that “a court should decide for itself whether § 1’s 2 ‘contracts of employment’ exclusion applies before ordering arbitration.” New Prime 3 Inc. v. Oliveira, 586 U.S. 105, 111 (2019). Section 1 of the FAA exempts “contracts of 4 employment of seamen, railroad employees, or any other class of workers engaged in 5 foreign or interstate commerce.” 9 U.S.C. § 1. The phrase “contracts of employment” 6 specifically captures “any contract for the performance of work by workers.” New 7 Prime, 586 U.S. at 116. It therefore “does not extend to business entities or to 8 commercial contracts.” Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190, 1201 9 (9th Cir. 2024). The Supreme Court has ruled that section 1’s exclusion of workers 10 “engaged in commerce” must “be afforded a narrow construction.” Cir. City Stores, 11 Inc. v. Adams, 532 U.S. 105, 106 (2001). Also, because Ervin is the party opposing 12 arbitration, he bears the burden of establishing that the exemption applies. Rogers v. 13 Royal Caribbean Cruise Line, 547 F.3d 1148, 1151 (9th Cir. 2008). 14 Ervin argues that the exemption applies to him because the Ninth Circuit has held 15 that “transportation workers who are engaged in the movement of goods in interstate 16 commerce” are exempted, “even if they do not cross state lines.” (Opp’n 6 (quoting 17 Rittmann v. Amazon.com, Inc., 971 F.3d 904, 915 (9th Cir. 2020)).) Amazon replies 18 that the Ninth Circuit’s recent decision in Fli-Lo Falcon, which distinguished Rittmann, 19 applies to this case. (Reply 3.) 20 In Rittmann, the Ninth Circuit considered a program called “AmFlex.” 971 F.3d 21 at 907. Unlike with the DSP Agreement, under AmFlex, “Amazon contract[ed] with 22 individuals.” Id. (emphasis added). In Rittmann, the court held that the individual 23 AmFlex drivers fell within the FAA’s transportation worker exemption because they 24 were “engaged in the movement of goods in interstate commerce.” 971 F.3d at 915– 25 16. Even though the AmFlex drivers did not regularly cross state lines, the court 26 reached this finding because the “out-of-state nature of [their] goods” remained in the 27 flow of interstate commerce until final delivery. Id. at 917. 28 1 Four years later, in Fli-Lo Falcon, the Ninth Circuit considered a DSP agreement 2 practically identical to the one at issue here, between Amazon and another corporation. 3 97 F.4th at 1192. There, the Ninth Circuit concluded that the DSP agreement was a 4 commercial contract, and distinguished Rittmann as involving agreements between 5 Amazon and individual delivery drivers. Id. at 1196–97. It noted that the Rittmann 6 court said “nothing about whether a business entity can be a ‘worker’ subject to a 7 ‘contract of employment’ under the transportation worker exemption.” Id. The court 8 concluded that section 1 “does not extend to business entities or to commercial 9 contracts” like the DSP agreement, emphasizing that the transportation worker 10 exemption is limited to “contracts of employment . . . for the performance of work by 11 workers.” Id. at 1197. 12 Ervin tries to distinguish this case from Fli-Lo Falcon, which involved the same 13 business-to-business commercial contract as here, and paint it as more like Rittmann, in 14 which Amazon contracted directly with individual drivers who were transportation 15 workers subject to section 1 of the FAA. (Opp’n 8–9.) 16 Ervin first argues he is unlike the plaintiffs in Fli-Lo Falcon, who were 17 sophisticated business parties, and more like the individual delivery drivers in Rittmann. 18 (Id.) However, this argument is contradicted by the fact that, like the plaintiffs in Fli-Lo 19 Falcon, the entire basis for Ervin’s relationship with Amazon was his business’s 20 commercial contract. (See McCabe Decl. ¶¶ 5–7); see also Fli-Lo Falcon, 97 F.4th 21 at 1198 (“[T]he transportation worker exemption does not extend to business entities 22 like [Delivery Service Partners].”). That Ervin brings this action as an individual 23 instead of on behalf of his business, (see Compl.), does not alter this analysis. The DSP 24 Agreement—executed between Amazon and BTS—is a commercial contract and not a 25 “contract of employment . . . for the performance of work by workers,” subject to the 26 FAA’s section 1 exemption. Fli-Lo Falcon, 97 F.4th at 1197 (distinguishing Rittmann 27 because there, “the question presented was whether contracts between individual 28 1 drivers, who contracted directly with Amazon to provide local package delivery . . . 2 were exempted from the FAA by the transportation worker exemption”). 3 Therefore, Amazon is correct that the instant case is more analogous to Fli-Lo 4 Falcon, where the Ninth Circuit held explicitly that the DSP agreement was a 5 commercial contract “not subject to the transportation worker exemption” because the 6 parties that executed it were “business entities and not natural persons.” Id. at 1197– 7 98. To that point, the DSP Agreement does not define any duties or obligations for 8 Ervin individually, as one would expect to find if it were an employment contract. (See 9 DSP Agreement.) Instead, the DSP Agreement delineates “the transportation, delivery, 10 and related services . . . performed by [BTS],” (DSP Agreement 1), as would “a 11 commercial contract between two business entities,” Fli-Lo Falcon, 97 F.4th at 1197. 12 Accordingly, the Court concludes that the DSP Agreement in this case is like the 13 agreement in Fli-Lo Falcon and therefore falls outside the FAA’s section 1 exemption. 14 As the nature of the claims in Fli-Lo Falcon were not relevant to the Ninth 15 Circuit’s holding, see id. at 1201, the Court rejects Ervin’s argument that Fli-Lo Falcon 16 is distinguishable because he brought this action under California labor and 17 employment statutes and not contract law, (Opp’n 8–9). Thus, the Court finds that 18 section 1 of the FAA does not exempt Ervin from arbitration. 19 C. Remaining Issues 20 Ervin contends that this action is not arbitrable because (1) the DSP Agreement’s 21 forum selection clause renders it substantively unconscionable; (2) the choice-of-law 22 clause unlawfully diminishes his statutory rights by imposing Washington state law; 23 and (3) California Labor Code section 925 bars conditioning employment on an 24 agreement that designates a non-California forum or governing law. (Opp’n 9–11.) 25 However, because the Court finds that the parties delegated all questions of arbitrability 26 to an arbitrator through the DSP Agreement, it does not reach the merits of these issues. 27 The “gateway issues can be expressly delegated to the arbitrator where ‘the 28 parties clearly and unmistakably provide otherwise.’” Brennan v. Opus Bank, 796 F.3d 1 1125, 1130 (9th Cir. 2015) (emphasis omitted) (quoting AT&T Techs., Inc. v. Commc’ns 2 Workers of Am., 475 U.S. 643, 649 (1986)). Relevant here, AAA’s commercial 3 arbitration rules expressly provide that the “arbitrator shall have the power to rule on 4 his or her own jurisdiction, including any objections with respect to the . . . validity of 5 the arbitration agreement.” AAA, Commercial Arbitration Rules and Mediation 6 Procedures R-7(a) (2022). Consequently, “[v]irtually every circuit to have considered 7 the issue has determined that incorporation of the American Arbitration Association’s 8 (AAA) arbitration rules constitutes clear and unmistakable evidence that the parties 9 have agreed to arbitrate arbitrability.” Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 10 1069, 1074 (9th Cir. 2013) (collecting cases); see, e.g., Fli-Lo Falcon, 97 F.4th at 1201 11 (“[I]ncorporation of the AAA rules constitutes clear and unmistakable evidence that 12 contracting parties agreed to arbitrate arbitrability.” (quoting Brennan, 706 F.3d 13 at 1130)). Therefore, Amazon is correct that the DSP Agreement’s arbitration provision 14 “clearly and unmistakenly delegates questions of arbitrability to the arbitrator” by 15 incorporating AAA arbitration rules. (Mem. 5; DSP Agreement ¶ 13 (“The arbitration 16 will be conducted by the American Arbitration Association (the ‘AAA’) under its rules, 17 including the AAA’s Commercial Arbitration Rules.”).) 18 Where, as here, the parties have delegated arbitrability, “the only remaining 19 question is whether the particular agreement to delegate arbitrability—the [d]elegation 20 [p]rovision—is itself unconscionable.” Fli-Lo Falcon, 97 F.4th at 1199 (alterations in 21 original). Furthermore, “to sufficiently challenge a delegation provision, the party 22 resisting arbitration must specifically reference the delegation provision and make 23 arguments challenging it.” Bielski, 87 F.4th at 1011. 24 1. Unconscionability 25 Ervin appears to contend, through the case law he cites, that the DSP 26 Agreement’s forum selection clause is substantively unconscionable. (See Opp’n 9 27 (“[T]he forum selection provision renders the agreement to arbitrate substantively 28 1 unconscionable.” (quoting Magno v. The Coll. Network, Inc., 1 Cal. App. 5th 277 2 (2016)).) 3 Because “an arbitration provision is severable from the remainder of the contract” 4 as a matter of federal law, a party must challenge “the precise agreement to arbitrate at 5 issue” under section 2 of the FAA. Rent-A-Center, 561 U.S. at 71; 9 U.S.C. § 2 (“[A]n 6 agreement in writing to submit to arbitration . . . shall be valid, irrevocable, and 7 enforceable, save upon such grounds as exist at law or in equity for [its] revocation.”). 8 Similarly, the party opposing delegation must “specifically reference the delegation 9 provision and make arguments challenging it.” Bielski, 87 F.4th at 1011. 10 Critically, Ervin makes no mention of the DSP Agreement’s delegation provision 11 in his opposition brief. (See generally Opp’n.) Ervin argues only that the DA 12 Agreement between himself and BTS does not clearly and unmistakably delegate 13 questions of arbitrability to an arbitrator. (Id. at 11–12.) Similarly, Ervin’s challenge 14 to the DSP Agreement’s forum selection and choice-of-law clauses as unconscionable 15 does not address the DSP Agreement’s delegation provision directly. Indeed, because 16 Ervin fails to make any discernible argument as to why the delegation provision itself 17 is unconscionable, the Court need not consider unconscionability challenge. See Rent- 18 A-Center, 561 U.S. at 73 (holding there was no need to consider unconscionability 19 claim where party asserting an arbitration agreement was unconscionable failed to 20 challenge the governing delegation provision). The Court must therefore leave any 21 determination as to the alleged unconscionability of the DSP Agreement to an arbitrator. 22 2. Diminishment of Statutory Rights 23 Next, Ervin argues that his claims are based on California labor laws and 24 “employers may not use a forum selection and choice-of-law clause to circumvent 25 employees’ unwaivable statutory rights.” (Opp’n 10 (citing Verdugo v. Alliantgroup, 26 L.P., 237 Cal. App. 4th 141 (2015), as modified on denial of reh’g (June 25, 2015)).) 27 However, this issue also falls within the scope of the delegation provision. See 28 Ratajesak v. New Prime, Inc., No. 2:18-cv-09396-DOC (AGRx), 2019 WL 1771659, 1 at *5 (C.D. Cal. Mar. 20, 2019) (declining to address the arbitrability of a California 2 unpaid wages claim after concluding that the parties delegated questions of arbitrability 3 to an arbitrator). Ervin’s reliance on Verdugo is misplaced, as that case addressed a 4 forum selection and choice-of-law clause in the absence of a delegation provision. See 5 Verdugo, 237 Cal. App. 4th at 145–46. Even under California law, a clear and 6 unmistakable delegation provision encompasses challenges related to whether an 7 agreement’s language has any effect on a party’s statutory rights. See Zhang v. Superior 8 Ct. of Los Angeles Cnty., 85 Cal. App. 5th 167, 184 (2022) (“The arbitrator will decide, 9 as agreed, all issues of arbitrability, including whether petitioner is an employee who is 10 entitled to invoke the[ir] protections [under California Law].”). Accordingly, even if 11 the Court “believes that the underlying claims are plainly non-arbitrable, it must 12 delegate that question to the arbitrator.” Ratajesak, 2019 WL 1771659, at *5. 13 3. California Labor Code Section 925 14 Similarly, the Court does not reach Ervin’s challenge that the DSP Agreement is 15 unenforceable under California Labor Code section 925. (See Opp’n 10–11.) That 16 section prohibits employers from “requir[ing] an employee who primarily resides and 17 works in California, as a condition of employment, to agree to a provision that 18 would . . . [r]equire the employee to adjudicate outside of California a claim arising in 19 California.” Cal. Lab. Code § 925(a). California courts and courts in this District have 20 found that “the applicability of Labor Code section 925 is a question of arbitrability that 21 may be delegated to the arbitrator.” Zhang, 85 Cal. App. 5th at 178 (collecting cases); 22 see Ratajesak, 2019 WL 1771659, at *6. Thus, Ervin’s challenge based on section 925 23 is for the arbitrator to resolve.5 24 5 Ervin appears to argue that the DSP Agreement is unenforceable under California Labor Code 25 section 432.6, (Opp’n 11), which prohibits employers from “requir[ing] any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of [FEHA or 26 the Labor Code] . . . including the right to file and pursue a civil action” in court. Cal. Lab. Code § 432.6(a). The Ninth Circuit has held that “the FAA preempts [section 432.6] as a whole to the extent 27 it applies to arbitration agreements.” Chamber of Com. v. Bonta, 62 F.4th 473, 490 (9th Cir. 2023). 28 Therefore, to the extent the DSP Agreement does not delegate this issue to the arbitrator, Ervin’s challenge fails as the FAA preempts section 432.6. 1 In sum, when parties to an arbitration agreement contractually delegate questions 2|| of arbitrability to an arbitrator, “a court may not override the contract... [and] 3 || possesses no power to decide the arbitrability issue.” Henry Schein, Inc. v. Archer & 4|| White Sales, Inc., 586 U.S. 63, 68 (2019). As Ervin is bound by the DSP Agreement’s 5 || arbitration provision and his challenges to arbitration fail, the Court must compel 6 || arbitration of his claims against Amazon. 7 Vv. CONCLUSION 8 For the reasons discussed above, the Court GRANTS Amazon’s Motion to Compel Arbitration and Stay Litigation. (ECF No. 23.) The parties are hereby 10 | COMPELLED to arbitrate the claims Ervin asserts in his Complaint. This action is 11 | STAYED pending completion of Ervin’s arbitration with Amazon. 12 Starting on September 15, 2025, and by the fifteenth of the month every three 13 | (3) months thereafter, the parties shall file a Joint Status Report informing the Court of 14 || the status of arbitration. Furthermore, the parties shall file a Joint Status Report no later 15 || than ten (10) days following the conclusion of arbitration. 16 17 18 IT IS SO ORDERED. 19 20 June 5, 2025
One 3 OTIS D. IGHT, II 4 UNITED STATES DISTRICT JUDGE
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