Johnese v. Starbucks Corporation

• Court: District Court, N.D. California
• Decided: February 18, 2020
• Docket: 4:19-cv-04797
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 AALIYAH JOHNESE, Case No. 19-cv-04797-HSG 8 Plaintiff, ORDER ON MOTION TO COMPEL 9 v. Re: Dkt. No. 19 10 STARBUCKS CORPORATION, 11 Defendant. 12 Pending before the Court is Defendant’s motion to compel arbitration and dismiss or stay 13 the action. See Dkt. Nos. 19 (“Mot.”), 25-1 (“Opp.”), 26 (“Reply”). The Court held a hearing on 14 the motion for summary judgment on January 23, 2020. Dkt. No. 27. For the reasons provided 15 below, the Court GRANTS Defendant’s motion to compel arbitration and STAYS the action. 16 I. BACKGROUND 17 Plaintiff Aaliyah Johnese filed this action against Starbucks Corporation (“Defendant” or 18 “Starbucks”) on June 19, 2019, in San Francisco Superior Court. Dkt. No. 1-2 (“Complaint”). 19 Plaintiff brings a wrongful termination suit, alleging eight causes of action: (1) discrimination 20 based on disability; (2) failure to engage in timely interactive process; (3) failure to accommodate; 21 (4)retaliation; (5) aiding and abetting discrimination; (6) failure to prevent discrimination; (7) 22 wrongful termination; and (8) unfair business practices. Id. Defendant removed the case on 23 August 14, 2019. Dkt. No. 1. 24 According to the Complaint, Plaintiff was hired by Defendant in May 2016 to work as a 25 Barista at Defendant’s 398 Market Street San Francisco location. Complaint ¶ 18. During her 26 employment, Plaintiff requested intermittent leave in order to obtain medical treatment between 27 late 2016 and June 2017. Id. ¶¶ 21–22. Defendant’s store managers Katie Blake and Megan 1 with Plaintiff; instead, they responded with verbal and written discipline for missing work shifts 2 on the days that Plaintiff had requested time off for treatment for her medical condition. Id. at 3 ¶¶ 22–26. Defendant’s managers further requested medical information regarding Plaintiff’s 4 condition and terminated Plaintiff before she was able to provide additional documentation. Id. at 5 ¶ 27. Plaintiff was terminated on June 15, 2017. Id. 6 II. LEGAL STANDARD 7 The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., establishes that a written 8 arbitration agreement is “valid, irrevocable, and enforceable, save upon such grounds as exist at 9 law or in equity for the revocation of any contract.” 9 U.S.C. § 2; see also Moses H. Cone Mem’l 10 Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (noting federal policy favoring arbitration). 11 When a party moves to compel arbitration, the court must determine (1) “whether a valid 12 arbitration agreement exists” and (2) “whether the agreement encompasses the dispute at issue.” 13 Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). The 14 agreement may also delegate gateway issues to an arbitrator, in which case the court’s role is 15 limited to determining whether there is clear and unmistakable evidence that the parties agreed to 16 arbitrate arbitrability. See Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). In either 17 instance, “before referring a dispute to an arbitrator, the court determines whether a valid 18 arbitration agreement exists.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 19 530 (2019) (citing 9 U.S.C. § 2). 20 When the parties contest whether an agreement was formed, the court applies “general 21 state-law principles of contract interpretation,” without a presumption in favor of arbitrability. 22 Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733, 742 (9th Cir. 2014) (internal quotation 23 omitted). The party seeking to compel arbitration bears the burden of proving by a preponderance 24 of the evidence that there was an agreement to arbitrate. Norcia v. Samsung Telecomms. Am., 25 LLC, 845 F.3d 1279, 1283 (9th Cir. 2017). Conversely, the party opposing arbitration is entitled 26 to the benefit of all reasonable doubts and inferences. Three Valleys Mun. Water Dist. v. E.F. 27 Hutton & Co., 925 F.2d 1136, 1141 (9th Cir. 1991). Therefore, a court may find that an 1 concerning the formation of the agreement.” Id. (internal quotation omitted); see also Alarcon v. 2 Vital Recovery Servs., Inc., 706 F. App’x 394, 394 (9th Cir. 2017) (same). 3 III. ANALYSIS 4 Defendant argues that Plaintiff is bound by an arbitration agreement, which requires 5 arbitration of any claims related to Plaintiff’s employment with Starbucks. Mot. at 6–12. Plaintiff 6 responds with two primary arguments: first, Starbucks cannot prove that Plaintiff signed the 7 arbitration agreement, and second, even if Starbucks could prove that Plaintiff signed the 8 Agreement, it is unconscionable. Opp. at 7–14.1 In order to address each argument, the Court 9 first details Starbucks’ application and hiring process. 10 A. Arbitration Agreement 11 Kathryn Daly, director of recruiting for Starbucks, submitted a declaration explaining the 12 application and hiring process across Starbucks. See Dkt. No. 19-5 (“Daly Decl.”).2 Beginning on 13 October 1, 2014, Starbucks required as a condition of employment that new hires agree to arbitrate 14 any and all claims related to their employment. Id. at ¶ 3. Between October 1, 2014 and on or 15 about May 15, 2017, Starbucks also required that applicants for retail, non-managerial positions 16 apply through an online system called Retail Hourly Hiring (“RHH”), which Plaintiff used when 17 she applied on May 5, 2016. Id. at ¶¶ 2, 5. To apply, the RHH system requires an applicant to 18

19 1 Although Plaintiff suggests that Defendant has not met its burden to establish that the FAA applies, her arguments are mistaken. Opp. at 5–6. FAA’s “involving commerce” requirement is 20 interpreted broadly, and here, where Plaintiff worked for Defendant, a multi-state business, that requirement is met. See Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 276–77 21 (1995). Additionally, neither California Labor Code 229 nor AB 51 affects this case. See Lane v. Francis Capital Mgmt. LLC, 168 Cal. Rptr. 3d 800, 808 (Cal. Ct. App. 2014) (“[S]ection 229 is 22 limited to actions for the collection of due and unpaid wages brought under sections 200 through 244; section 229 does not apply to all statutory wage and hour claims”); Chamber of Commerce of 23 the United States et al. v. Becerra et al., No. 2:19-cv-02456, Dkt. No. 24 (E.D. Cal. Dec. 30, 2019) (granting a temporary restraining order enjoining enforcement of AB 51). 24 2 Plaintiff improperly raises evidentiary objections to Daly’s declaration, as well as that of Sandi Loftus, the partner resources manager at the San Francisco store where Plaintiff worked. Opp. at 4 25 (citing Dkt. Nos. 19-5, 19-11). Both declarants provide evidence sufficient to support a finding that they have personal knowledge about the topics discussed. Daly is familiar with Starbucks’ 26 hiring policies and practices through her position as director of recruiting at Starbucks. Daly Decl. ¶ 1. Similarly, Loftus is familiar with the onboarding process through her position as a manager at 27 the store where Plaintiff worked. Dkt. No. 19-11 at ¶¶ 2–3. That neither of these individuals has 1 create a user account to access the application, by entering a username, password, and the 2 applicant’s email address. Id. at ¶¶ 5, 6. It then directs the applicant to a “Pre-Application 3 Disclosures” page, which includes the following disclosure: “It is Starbucks policy that after 4 October 1, 2014, all new hires shall be subject to an arbitration agreement as a condition of 5 employment.” Id. at ¶ 6. Applicants are required to click a button at the bottom of the page that 6 states “I consent to receive and respond to notices in electronic form.” See Dkt. No. 19-6, Exhibit 7 B. 8 Once an applicant is offered a position, Starbucks requires the now prospective employee 9 to again use the RHH system, this time to complete “Employee Onboarding.” Daly Decl. at ¶ 12. 10 The user is presented with an “Electronic Consent” page that gives him or her an option between 11 consenting to receive and respond to information in electronic form or to close the browser 12 window and cancel the process. Id. at ¶ 13; see also Dkt. No. 19-6, Exhibit D. The system does 13 not permit proceeding to the next page without consenting. Daly Decl. at ¶ 13. Later, the RHH 14 system also presents an “e-Signature Acceptance” page which states:

15 I agree to sign these electronic PDF documents using “click” signature technology . . . I intend both the signature I inscribe with the 16 “click” signature technology and the electronic record of it to be my legal signature to the document. 17 Dkt. No. 19-6, Exhibit F. Again, a user cannot proceed to the next page unless he or she clicks a 18 box stating, “Check here to agree.” Daly Decl. at ¶ 16. Thereafter, the user is directed to the “e- 19 Sign Forms” page which requires the user to review his or her I-9 and W-4 forms, as well as 20 Starbucks’ Arbitration Agreement (“Arbitration Agreement” or “Agreement”). Id. at ¶¶ 17–18. A 21 user can either sign each of the forms individually or use the “Sign All” link once he or she views 22 all the forms, including the Arbitration Agreement. Id. Once a user signs the form, the RHH 23 system automatically generates an email to the email address on file with a copy of the 24 Agreement. Id. at ¶ 20. 25 The Arbitration Agreement provides: 26 Starbucks and I agree to use binding individual arbitration to resolve 27 any “Covered Claims” that arise between me and Starbucks, its “Starbucks”). “Covered Claims” are those brought under any statute, 1 local ordinance, or common law relating to my employment, including those concerning any element of compensation, 2 harassment, discrimination, retaliation, recovery of bonus or relocation benefits, leaves of absence, accommodations, or 3 termination of employment. 4 Dkt. No. 19-6, Exhibit H. It further provides that each party will pay its own attorneys’ fees and 5 costs, the parties will engage in limited discovery, and the parties shall attempt to agree on a 6 mutual arbitrator. Id. 7 B. Signature 8 Plaintiff first argues that Defendant fails to produce evidence that shows the parties agreed 9 to arbitrate. Opp. at 7–8. Plaintiff notes that she “does not believe the arbitration provision was 10 ever presented to” her during the hiring process and that the first time she “saw it was [July 23,] 11 2019.” Dkt. No. 25-3 (“Johnese Decl.”) at ¶ 20. “In California, [g]eneral principles of contract 12 law determine whether the parties have entered a binding agreement to arbitrate.” Pinnacle 13 Museum Tower Assn. v. Pinnacle Mkt. Dev. (US), LLC, 282 P.3d 1217, 1224 (Cal. 2012). “The 14 party seeking arbitration bears the burden of proving the existence of an arbitration agreement.” 15 Id. To show that Plaintiff entered into the arbitration agreement with Starbucks, Starbucks 16 provides the following evidence. First, Defendant provides Plaintiff’s application filled out 17 through the RHH system. See Dkt. No. 19-6, Exhibit C. The application includes personal details 18 including Plaintiff’s address, social security number, telephone number, and birthdate, all of which 19 would have required Plaintiff’s participation to enter. Id. The application also indicates that 20 Plaintiff viewed the Pre-Application Disclosures, which specifically noted that “[i]t is Starbucks 21 policy that after October 1, 2014, all new hires shall be subject to an arbitration agreement as a 22 condition of employment.” Id. Second, Defendant provides evidence of Plaintiff’s onboarding 23 forms submitted through the RHH system. See Dkt. No. 19-6, Exhibit I. Again, the onboarding 24 forms include personal details that Plaintiff provided such as emergency contacts. Dkt. No. 19-6, 25 Exhibit E. They further indicate that Plaintiff viewed and signed the Arbitration Agreement on 26 May 23, 2016 at 10:47 a.m. Id. Finally, as indicated in Ms. Daly’s declaration regarding typical 27 procedure for the RHH system, Starbucks’ email history shows automated emails sent to Plaintiff, 1 Agreement.” Dkt. No. 19-6, Exhibit J. The Court finds that this evidence establishes a valid 2 signature by a preponderance of the evidence. Other courts have similarly found that such 3 evidence is sufficient to establish that plaintiff’s electronic signature was valid. See e.g., Rezaeian 4 v. Starbucks Corp., No. 2:16-cv-04599-JAK (ASx), Dkt. No. 21 (C.D. Cal. February 8, 2017) 5 (finding the same evidence regarding Starbucks’ RHH recruiting system established a valid 6 signature); Gonzalez v. Ceva Logistics U.S., Inc., No. 16-cv-04282-WHO, 2016 WL 6427866, at 7 *3 (N.D. Cal. Oct. 31, 2016) (finding that defendant “offered adequate evidence that only 8 [plaintiff] could have filled out this form, that the document could not have been altered after it 9 was submitted, and that [plaintiff] herself signed the arbitration agreement” through a declaration 10 of a human resources director detailing the electronic hiring process); accord Horne v. Starbucks 11 Corp., No. 2:16-cv-02727 (MCE) CKD, 2017 WL 2813170, at *1 (E.D. Cal. June 29, 2017) 12 (describing a substantially similar hiring process). 13 To the extent Plaintiff argues that an electronic signature is not enough, under California 14 law “[a] record or signature may not be denied legal effect or enforceability solely because it is in 15 electronic form.” Cal. Civ. Code § 1633.7(a). As part of the onboarding forms, Plaintiff 16 specifically consented to “click” signature technology, and stated that she “intend[s] both the 17 signature . . . and the electronic record of it to be [her] legal signature to the document.” Dkt. No. 18 19-6, Exhibit F. This, in addition to Starbucks’ evidence that Plaintiff received a notification that 19 Starbucks required new hires to sign an arbitration agreement during the application process, 20 viewed and consented to the agreement during onboarding, and was sent an electronic copy of the 21 agreement, establishes that the “electronic record or electronic signature is attributable to [Plaintiff 22 because] it was the act of [Plaintiff]. Cal. Civ. Code § 1633.9; see also Mikhak v. Univ. of 23 Phoenix, No. 16-cv-00901-CRB, 2016 WL 3401763, at *6 (N.D. Cal. June 21, 2016) (“Electronic 24 signatures and clicking ‘Accept’ are valid means of expressing assent to a contract.”).3 25 At the January 23, 2020 hearing, Plaintiff’s counsel made a new argument that Plaintiff 26 only filled out written paperwork, and that a manager might have completed the RHH system 27 1 prompts for the application and onboarding forms. However, zero evidence of this claim has been 2 presented in support of this claim. In Plaintiff’s declaration, she states that she “recall[s] filling 3 out some paper work, and doing some online training,” but later implicitly concedes that she used 4 the RHH system even though she cannot confirm that the screenshots that Defendant provides for 5 evidence are “the exact screen[s that she] saw.” Johnese Decl. at ¶ 2, 8. No evidence supports 6 counsel’s new argument. 7 Accordingly, the Court finds the evidence Starbucks submitted sufficiently establishes that 8 Plaintiff electronically signed the Arbitration Agreement. 9 C. Unconscionability 10 Plaintiff next argues that even if the Court determines that an agreement to arbitrate did 11 exist, the Agreement is nonetheless unenforceable on unconscionability grounds. Opp. 8–14. 12 “Under California law, a contract must be both procedurally and substantively unconscionable to 13 be rendered invalid.” Chavarria v. Ralphs Grocery Co., 733 F.3d 916, 922 (9th Cir. 2013) (citing 14 Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669, 690 (Cal. 2000)). “Procedural 15 unconscionability concerns the manner in which the contract was negotiated and the respective 16 circumstances of the parties at that time, focusing on the level of oppression and surprise involved 17 in the agreement.” Id. Substantive unconscionability looks at whether the contract “is 18 unjustifiably one-sided to such an extent that it ‘shocks the conscience.’” Id. at 923. Because the 19 Court finds that Plaintiff cannot show the Arbitration Agreement at issue here was substantively 20 unconscionable, it need not address procedural unconscionability. 21 Plaintiff argues that the Arbitration Agreement is substantively unconscionable because it 22 fails to provide a fair process for the selection of an arbitrator and provides extremely limited 23 discovery. Opp. at 10–14. As to these two elements, the Agreement provides:

24 Selecting the Arbitrator. The parties shall confer and attempt to mutually agree on an Arbitrator. If the parties cannot agree, the parties 25 shall contact AAA and request that AAA provide the parties a list of nine arbitrators. The parties shall confer in person or by telephone and 26 select the Arbitrator who will hear the Covered Claim from this list. The party demanding arbitration shall strike a name first, and then the 27 responding party, alternating strikes until only one name remains, 1 Discovery of Evidence. (i) Each party shall be entitled to three interrogatories in a form consistent with Rule 33 of the Federal Rules 2 of Civil Procedure (“FRCP”). (ii) Each party shall be entitled to only 25 requests for production of documents in a form consistent with 3 Rule 34 of the FRCP. (iii) Each party shall be entitled a maximum of two eight-hour days of depositions of witnesses in a form consistent 4 with Rule 30 of the FRCP. 5 Dkt. No. 19-6, Exhibit H. 6 To be lawful, an arbitration agreement must “(1) provide[] for neutral arbitrators, (2) 7 provide[] for more than minimal discovery, (3) require[] a written award, (4) provide[] for all of 8 the types of relief that would otherwise be available in court, and (5) [] not require employees to 9 pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the 10 arbitration forum.” Armendariz, 6 P.3d at 682. The provisions detailed above do not run afoul of 11 these requirements. While the selection of the arbitrator contemplates a mutual agreement on an 12 arbitrator, it also provides a neutral procedure that fairly allows both parties to participate in the 13 selection process. Although Plaintiff argues that Starbucks will receive special treatment because 14 it is a repeat player, this is precisely the reason that arbitrators are required to “disclose to the 15 parties any dealings that might create an impression of possible bias.” Commonwealth Coatings 16 Corp. v. Cont’l Cas. Co., 393 U.S. 145, 149 (1968). Additionally, “a limitation on discovery is 17 one important component of the simplicity, informality, and expedition of arbitration.” 18 Armendariz, 6 P.3d at 684 n.11 (citations and quotations omitted). The Agreement provides for 19 limited interrogatories, requests for production of documents, and two eight-hour days of 20 depositions of party and non-party witnesses. It further authorizes the arbitrator to allow either 21 party to apply for additional discovery through a showing of “substantial need.” The Agreement’s 22 discovery provisions thus meet the threshold required. See Sanchez v. Carmax Auto Superstores 23 California, LLC, 168 Cal. Rptr. 3d 473, 478–80 (2014) (similarly upholding an agreement to 24 arbitrate where it provided for less discovery than court procedures mandate when it allowed 25 parties to apply to further discovery by showing a “substantial need.”); Horne, 2017 WL 2813170, 26 at *3 (holding the same for the Agreement at issue in this case).4 27 1 Plaintiff also argues that the Agreement is substantively unconscionable because it focuses 2 only on limiting claims that an employee may bring, while Defendant “retains the unfettered right 3 to file in civil court.” Opp. at 11. The Court disagrees. The arbitration agreement specifically 4 provides that covered claims “are those brought under any statute, local ordinance or common law 5 relating to [an individual’s] employment.” Dkt. No. 19-6, Exhibit H. That it gives examples of 6 discrimination, harassment, and other claims specific to an employee does not limit the Agreement 7 to those claims. In fact, the Agreement contemplates an employee’s initiation of arbitration, 8 showing that both typical “employee” claims and typical “employer” claims are subject to 9 arbitration. Id. Unlike the agreement in Abramson v. Juniper Networks, Inc. cited by Plaintiff, the 10 Agreement does not have a carve-out for “claims . . . related to trade secrets, confidential 11 information, and other intellectual property.” 9 Cal. Rptr. 3d 422, 443 (Cal. Ct. App. 2004). It 12 instead applies to claims brought under any law. 13 Plaintiff thus fails to show that the Agreement “shocks the conscience” or is substantively 14 unconscionable. Accordingly, the Court finds the Agreement enforceable and “must compel 15 arbitration of otherwise arbitrable claims.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219, 16 (1985). 17 // 18 // 19 // 20 // 21 // 22 23 Rptr. 3d 471, 486 (Cal. Ct. App. 2008). Here, the Agreement provides for two, eight-hour days of deposition in the aggregate, which could accommodate more than two depositions (depending on 24 their length). Additionally, in Baxter v. Genworth N. Am. Corp., the court faced a factually complex employment litigation involving an employee with a 12-year employment history with 25 defendant. 224 Cal. Rptr. 3d 556, 568–70 (Cal. Ct. App. 2017). Plaintiff there identified a minimum of six percipient witnesses, and noted that documents “relating to family leave practices, 26 evaluation policies, reorganization, prior complaints similar to [plaintiff’s], communications concerning [plaintiff’s] discipline and termination, and [defendant’s] internal investigation, among 27 others” would all be necessary. Id. at 569. There is no similar circumstance in this case—Plaintiff IV. CONCLUSION For the reasons noted above, the Court GRANTS Defendant’s motion to compel 2 arbitration. This action is hereby STAYED pending resolution of the arbitration. The parties 3 shall file a joint report regarding the status of the arbitration proceeding 90 days from the date of 4 this order, and every 90 days thereafter until that proceeding is concluded. The parties also are 5 directed to jointly notify the Court within 48 hours of the conclusion of the arbitration proceeding. 6 The clerk is directed to administratively close the case. 7 IT IS SO ORDERED. 8 Dated: 2/18/2020

10 HAYWOOD S. GILLIAM, JR. United States District Judge

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