Justin Buchanan, individually, and on behalf of other members of the general public similarly situated v. CWP California Corp., a Delaware corporation; and Does 1 through 100, inclusive

Opinion

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8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 JUSTIN BUCHANAN, individually, No. 2:26-cv-00244-WBS-CSK 13 and on behalf of other members of the general public similarly 14 situated, MEMORANDUM AND ORDER RE: 15 Plaintiffs, MOTIONS TO REMAND AND COMPEL ARBITRATION 16 v. 17 CWP CALIFORNIA CORP., a Delaware corporation; and DOES 1 through 18 100, inclusive, 19 Defendants. 20 21 ----oo0oo---- 22 Plaintiff Justin Buchanan brought this putative wage- 23 and-hour class action in the Stanislaus County Superior Court, 24 alleging violations of various California labor laws. Defendant 25 CWP California Corp. (“MCW”)1 removed to this court based on 26 jurisdiction under the Class Action Fairness Act (“CAFA”). Now 27 1 CWP California Corp. does business as Mister Car Wash and is 28 accordingly abbreviated as “MCW.” (See Docket No. 12 at 6.) 1 before the court are defendants’ motion to compel arbitration, 2 which was filed on February 26, 2026 (Docket No. 12), and 3 plaintiff’s motion to remand, which was filed on March 2, 2026 4 (Docket No. 15). Although defendants’ motion to compel 5 arbitration was filed prior to plaintiff’s motion to remand, the 6 court addresses plaintiff’s motion to remand first, at the urging 7 of the parties. 8 I. Motion to Remand 9 Under the federal removal statute, “any civil action 10 brought in a State court of which the district courts of the 11 United States have original jurisdiction may be removed by the 12 defendant ... to the district court of the United States for the 13 district ... where such action is pending.” 28 U.S.C. § 1441(a). 14 Under CAFA, federal courts have original jurisdiction over class 15 actions in which the parties are minimally diverse, the proposed 16 class has at least 100 members, and the aggregated amount in 17 controversy exceeds $5,000,000. 28 U.S.C. § 1332(d)(2). 18 Importantly, “no antiremoval presumption attends cases invoking 19 CAFA, which Congress enacted to facilitate adjudication of 20 certain class actions in federal court.” Dart Cherokee Basin 21 Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014). 22 Plaintiff disputes only that the $5,000,000 amount in 23 controversy requirement has been satisfied. (See generally 24 Docket No. 15.) To that end, “if a defendant wants to pursue a 25 federal forum under CAFA, that defendant in a jurisdictional 26 dispute has the burden to put forward evidence showing that the 27 amount in controversy exceeds $5 million.” Ibarra v. Manheim 28 1 Invs., Inc., 775 F.3d 1193, 1197 (9th Cir. 2015); see also, e.g., 2 Jauregui v. Roadrunner Transportation Servs., Inc., 28 F.4th 989, 3 992 (9th Cir. 2022) (the “ultimate question” is “whether 4 [defendant] met its burden of showing the amount in controversy 5 exceeded $5 million”). 6 To determine the amount in controversy, the court must 7 look to the “face of the pleadings,” St. Paul Mercury Indem. Co. 8 v. Red Cab Co., 303 U.S. 283, 289 (1938), but may also consider 9 “facts in the removal petition” and “summary-judgment-type 10 evidence relevant to the amount in controversy at the time of 11 removal,” Kroske v. U.S. Bank Corp., 432 F.3d 976, 980 (9th Cir. 12 2005). 13 The amount in controversy is “not a prospective 14 assessment of defendant's liability.” Lewis v. Verizon Commc'ns, 15 Inc., 627 F.3d 395, 400 (9th Cir. 2010). Rather, it is the 16 “amount at stake in the underlying litigation.” Gonzales v. 17 CarMax Auto Superstores, LLC, 840 F.3d 644, 648 (9th Cir. 206) 18 (citation modified); see also Lewis, 627 F.3d at 400 (amount in 19 controversy is “simply an estimate of the total amount in 20 dispute”). It may include, among other things, “damages 21 (compensatory, punitive, or otherwise) and the cost of complying 22 with an injunction, as well as attorneys’ fees awarded under fee 23 shifting statutes.” Gonzales, 840 F.3d at 648-49. 24 Critically, here, “when the claimed amount in 25 controversy is challenged[,] ‘CAFA's requirements are to be 26 tested by consideration of real evidence and the reality of what 27 is at stake in the litigation, using reasonable assumptions 28 1 underlying the defendant's theory of damages exposure.’” Salter 2 v. Quality Carriers, Inc., 974 F.3d 959, 963 (9th Cir. 2020) 3 (quoting Ibarra, 775 F.3d at 1197-98) (emphasis added). 4 Defendants have provided a declaration from a payroll 5 analyst at MCW, Amanda Datlow, that describes the putative class 6 roster and a “report of the average hours worked across all 7 shifts and the average shifts worked per week by” the putative 8 class roster during the relevant time period. (Docket Nos. 18 at 9 11-12; 18-2 (Datlow Decl.).) Datlow shared these materials with 10 MCW’s outside counsel, Peter Hering, who performed the meticulous 11 calculations detailed in his declaration to arrive at an 12 estimated amount in controversy in excess of $5 million. (Docket 13 No. 18-1 (Hering Decl.) at 2.) 14 Specifically, Hering conducted a claim-by-claim, hour- 15 by-hour analysis to arrive at the amount in controvery claimed. 16 (See generally Hering Decl.). Using the reports and data 17 provided by Datlow, Hering determined that there were 18 approximately 944 putative class members for claims brought under 19 California Labor Code Section 203, which has a three-year statute 20 of limitations; the putative class worked approximately 81,000 21 weeks in total over the relevant time period; there were 22 approximately 798 putative class members for claims brought under 23 California Labor Code Section 226, which has a one-year statute 24 of limitations, who worked a total of 14,522 bi-weekly pay 25 periods during the relevant time period; the average rate of pay 26 for putative class members was $16.22 per hour, including a 27 discount of $1.50; the average rate of pay for terminated 28 1 employees was $17.41; and the average number of shifts worked per 2 week by putative class members was 4, at an average shift length 3 of 6.5 hours. (Id. at 2-5; see also Docket No. 18 at 7-8.) 4 Defendants then specify the violation rates for the 5 various claims at issue: a 10% violation rate for meal period 6 and rest break violations, and a 100% violation rate for waiting 7 time penalties (Cal. Lab. Code § 203) and wage statement 8 violations (Cal. Lab. Code § 206). (Docket No. 18 at 8-9.) 9 Combining these violation rates with the estimates provided in 10 the Hering Declaration, defendants arrive at an amount in 11 controversy of $5,667,202.62. (Id. at 9; 15-20.) With including 12 defendants’ proposed attorneys’ fees of $500,000 (less than ten 13 percent of the claimed amount in controversy), the amount in 14 controversy estimate rises to $6,167,202.62. (Id. at 9.) 15 Defendants’ specified violation rates are reasonable; 16 if anything, they are unnecessarily low. The Ninth Circuit has 17 stated that, in wage-and-hour putative class actions, “it makes 18 little sense to require a CAFA defendant to introduce evidence of 19 the violation rate—really, the alleged violation rate—because the 20 defendant likely believes that the real rate is zero and thus 21 that the evidence does not exist.” Perez v. Rose Hills Co., 131 22 F. 4th 804, 808 (9th Cir. 2025) (emphasis in original). 23 Accordingly, “a CAFA defendant can most readily ascertain the 24 violation rate by looking at the plaintiff's complaint.” Id. 25 Plaintiff’s complaint states that defendants have 26 engaged in a “pattern and practice of wage abuse.” (See Docket 27 No. 1-3 at 7.) Intuitively, the court would think that 28 1 defendants are entitled to assume a violation rate of 100% if a 2 “pattern and practice” is taken to mean defendants exercise it 3 all the time. If the term in understood to mean that defendants 4 exercise the practice most of the time, the violation rate would 5 be at least 50%. Accordingly, defendants’ concession of 10% for 6 the meal period and rest break claims seems generously low. 7 (Id.); see Perez, 131 F. 4th at 808; cf. also Avila v. Rue21, 8 Inc., 432 F. Supp. 3d 1175, 1189 (E.D. Cal. 2020) (O’Neill, C.J.) 9 (collecting cases and observing that “violation rates of 25% to 10 60% can be reasonably assumed as a matter of law based on 11 ‘pattern and practice’ or ‘policy and practice’ allegation[s]”). 12 Nevertheless, defendants have selected a conservative violation 13 rate of 10% for plaintiff’s meal period and rest break claims, 14 and the court finds that violation rate to be amply supported by 15 the allegations in plaintiff’s complaint. See Perez, 131 F. 4th 16 at 809. 17 Defendants assume a 100% violation rate for plaintiff’s 18 waiting time and wage statement claims. (Docket No. 18 at 8-9.) 19 Waiting time and wage statement claims are viewed as derivative 20 of other wage-and-hour claims in the sense that “[i]f 21 [d]efendants had a ‘pattern and practice’ of refusing to grant 22 meal and rest breaks or pay class members for all hours worked, 23 then it is likely that all or nearly all class members 24 experienced wage statement and delay violations.” Marquez v. 25 Southwire Co., LLC, No. ED-cv-21252 JGB SPX, 2021 WL 2042727, at 26 *6 (C.D. Cal. May 21, 2021) (quotations omitted and emphases 27 added). 28 1 Correspondingly, several courts in this circuit have 2 found that assuming a 100% violation rate for waiting time and 3 wage statement claims is reasonable because a “former employee 4 need only suffer one of the alleged violations at any time during 5 employment to bring a claim for failure to timely page wages upon 6 termination,” Wilcox v. Harbor UCLA Med. Ctr. Guild, Inc., No. 7 2:23-cv-02802 MCS JC, 2023 WL 5246264, at *4 (C.D. Cal. Aug. 14, 8 2023) (emphases added), and a claim for failure to provide 9 accurate wage statements, Sanchez v. Abbott Labs., No. 2:20-cv- 10 01436 TLN AC, 2021 WL 2679057. See also Jimenez v. Land O'Lakes, 11 Inc., No. 1:23-cv-00891 JLT SKO, 2025 WL 2992313, at *6 (E.D. 12 Cal. Oct. 24, 2025) (applying Wilcox). 13 Further, defendants’ assumption that the statutory 14 maximum of thirty days of waiting time penalties, see Cal. Lab. 15 Code § 203, applies is warranted, too, because the complaint 16 expressly states that it is seeking that “upto” that maximum in 17 penalties (see Docket No. 1-3 at 16). See Ortiz v. Sheraton 18 Operating LLC, No. LA cv-24-05104JAK (JPRX), 2024 WL 4625951, at 19 *8 (C.D. Cal. Oct. 30, 2024) (observing that using amount less 20 than thirty-day maximum would be “unreasonable” where complaint 21 sought penalties “upto” that maximum). 22 Having determined defendants’ amount in controversy 23 calculations to be reasonable, and that the amount in controversy 24 has thus been met, the court will accordingly deny plaintiff’s 25 motion to remand. See 28 U.S.C. § 1332(d)(2). 26 II. Motion to Compel Arbitration 27 28 1 Defendant moves to compel arbitration of this dispute 2 based upon the arbitration provision in plaintiff’s employment 3 contract. The court could have addressed this motion before 4 plaintiff’s motion to remand, but the parties insisted the court 5 consider and rule upon plaintiff’s motion first. Thus, now that 6 the parties and the court have expended the time and resources 7 necessary to determine whether the case was properly removed to 8 this court, the court now must expend the time and resources to 9 determine whether it should have been filed in any court in the 10 first place. 11 A. Plaintiff’s Employment and the Arbitration Agreement 12 Plaintiff was employed at MCW as a Guest Services 13 Specialist from February 2024 to July 2025, when MCW terminated 14 his employment. (Docket No. 13 at 2.) MCW utilizes a “human 15 capital management platform” called Dayforce to facilitate 16 employee onboarding. (Id.) As part of his onboarding process, 17 Buchanan was required to review and sign a six-page document 18 titled “Mandatory Mutual Arbitration Agreement” (the 19 “Agreement”). (Id. at 4, 5.) 20 At the very top of the Agreement is a box with bolded 21 text that reads as follows: 22 This Arbitration Agreement is a contract and covers 23 important issues relating to your rights. It is your sole 24 responsibility to read it and understand it. You are free to seek 25 assistance from independent advisors of your choice outside the 26 Company or to refrain from doing so if that is your choice. 27 (Docket No. 13-2 at 1 (bold in original).) 28 1 The Agreement also includes what is frequently referred 2 to as a delegation clause, which states: “The Arbitrator, and 3 not any federal, state, or local court or agency, shall have 4 exclusive authority to resolve any dispute relating to the 5 interpretation, applicability, enforceability, or waiver of this 6 Agreement including, but not limited to, any claim that all or 7 any part of this Agreement is void or voidable” (the “Delegation 8 Clause”). (Id. at 2.) 9 The Agreement further includes a section, the heading 10 for which is bolded and underlined, entitled “Class and 11 Collective Action Waivers.” (Id. at 4 (bold and underline in 12 original).) The first sentence of this section provides that 13 both MCW and Buchanan “agree to bring any claim on an individual 14 basis and not on a class and/or collective action basis.” (Id.) 15 When an onboarding employee opens the Agreement using 16 the Dayforce platform, a pop-up box appears that prompts the 17 employee to select a box stating “I accept and acknowledge the 18 company policy above.” (Docket Nos. 13 at 4; 13-3.) An employee 19 may take “as much time as needed” to review the Agreement prior 20 to electronically accepting it, and they may also print it to 21 assist with their review. (Docket No. 13 at 4.) 22 MCW’s records reflect that plaintiff accessed the 23 Agreement and checked the acceptance box on February 27, 2024. 24 (See id. at 5; Docket Nos. 13-4, 13-5.) Plaintiff does not 25 dispute this version of events. Rather, plaintiff challenges 26 various provisions of the Agreement as unconscionable and 27 correspondingly unenforceable. (See generally Docket No. 17.) 28 1 B. Enforceability of the Agreement 2 Plaintiff first argues that the Delegation Clause is 3 unenforceable. (See id. at 9-16.) “When determining whether 4 claims are subject to arbitration, courts typically decide two 5 gateway questions of arbitrability: (1) whether there is an 6 agreement to arbitrate between the parties; and (2) whether the 7 agreement covers the dispute.” Diaz v. T-Mobile USA, Inc., No. 8 2:25-cv-02933 WBS CSK, 2026 WL 495233, at *2 (E.D. Cal. Feb. 23, 9 2026) (quotations omitted). However, these threshold issues “can 10 be delegated to the arbitrator where the parties have ‘clearly 11 and unmistakably’ manifested such intent’” through a delegation 12 clause. Gomez v. T-Mobile USA, Inc., No. 2:24-cv-01468 BJR, 2025 13 WL 3684175, at *2 (W.D. Wash. Feb. 19, 2025) (citing AT&T Techs., 14 Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649 (1986)); see 15 also, e.g., Kohler v. Whaleco, Inc., 757 F. Supp. 3d 1112, 1123 16 (S.D. Cal. 2024) (“[T]he Court considers, as a threshold matter, 17 whether there is clear and unmistakable evidence the parties 18 intended to delegate the arbitrability question to an 19 arbitrator.”). 20 As described above, the Agreement contains a delegation 21 clause stating that the arbitrator – and only the arbitrator – 22 has the authority to “resolve any dispute relating to the 23 interpretation, applicability, enforceability, or waiver” of the 24 Agreement. (Docket No. 13-2 at 2.) Courts within this circuit, 25 including this court, have “repeatedly . . . recognized” the 26 exact language in the Delegation Clause as “clear and 27 28 1 unmistakable evidence that the [p]arties intended to delegate.” 2 Diaz, 2026 WL 495233, at *2 (collecting cases). 3 Having now determined that the Agreement includes a 4 delegation clause, the court must “resolve any challenge that an 5 agreement to arbitrate was never formed” as well as “any 6 challenge directed specifically to the enforceability of the 7 delegation clause.” Caremark, LLC v. Chickasaw Nation, 43 F.4th 8 1021, 1030 (9th Cir. 2022). As plaintiff does not challenge that 9 an agreement to arbitrate was formed (see Docket No. 17), the 10 court turns to the latter inquiry. 11 C. Enforceability of the Delegation Clause 12 “A party may challenge a delegation provision using 13 generally applicable contract defenses, including 14 unconscionability.” Taylor v. TA Operating, No. 2:22-cv-0094 WBS 15 DMC, 2023 WL 171359, at *9 (E.D. Cal. Jan. 12, 2023) (internal 16 citations and quotation marks omitted). “Unconscionability has 17 both a ‘procedural’ and a ‘substantive’ element.” Id. at *3 18 (citing Armendariz v. Found. Health Psychcare Servs., 24 Cal. 4th 19 83, 114 (2000)).2 Both of these elements must be “present in 20 order for a court to exercise its discretion to refuse to enforce 21 a contract or clause under the doctrine of unconscionability.” 22 Id. 23 “A substantive unconscionability analysis examines the 24 fairness of a contract's terms,” and correspondingly involves 25 assessing whether there are “terms that are unreasonably 26 27 2 The parties agree that California law governs. (See Docket 28 Nos. 17, 19.) 1 favorable to the more powerful party.” Id. (internal citations 2 and quotation marks omitted). While a party may “cite[] 3 provisions outside of the delegation clause in making an 4 unconscionability challenge” to that clause, “it must explain how 5 those provisions make the fact of an arbitrator deciding 6 arbitrability unconscionable.” Holley-Gallegly v. TA Operating, 7 LLC, 74 F.4th 997, 1002 (9th Cir. 2023) (emphasis in original). 8 Plaintiff argues that the Delegation Clause is 9 substantively unconscionable due to a “lack of mutuality” present 10 in another section of the Agreement: in his telling, the 11 Agreement, which the Delegation Clause is “indelibly part of,” 12 “allows extremely broad swaths of third-party beneficiaries to 13 require Plaintiff to arbitrate his claims against [defendants], 14 but is devoid of any reciprocal language allowing Plaintiff to 15 compel such third-party beneficiaries to arbitrate any claims 16 Plaintiff may have against them.” (Docket No. 17 at 14-15.) 17 This argument is unavailing. The Agreement clarifies 18 that it applies equally to “any dispute” that defendants and 19 their beneficiaries “may have against” plaintiff (see Docket No. 20 13-2 at 1), which counters plaintiff’s claim that the Agreement 21 somehow lacks mutuality. 22 Moreover, it is not at all clear from plaintiff’s 23 papers how the Agremeent’s separate provision regarding third- 24 party beneficiaries pertains to the Delegation Clause, much less 25 how it “make[s] the fact of an arbitrator deciding arbitrability 26 unconscionable.” Holley-Gallegly, 74 F. 4th at 1002 (emphasis in 27 original). Also, the sole case plaintiff cites to support his 28 1 argument regarding a lack of mutuality, Cook v. Univ. of S. 2 California, 102 Cal. App. 5th 312 (2024) (see Docket No. 17 at 3 14-15), is readily distinguishable because, unlike here, the 4 agreement found to be unconscionable in Cook provided that the 5 plaintiff there would be required to arbitrate even those claims 6 that did not arise out of her employment with the defendants and 7 their beneficiaries. See 102 Cal. App. 5th at 321, 327. That 8 lack of mutuality is not present here, where the Agreement is 9 expressly limited in scope to only those claims that arise out of 10 plaintiff’s employment with defendants. (See Docket No. 13-2 at 11 1); see also Connell v. ByteDance, Inc., No. 24-cv-07859 NC, 2025 12 WL 1828472, at *15 (N.D. Cal. July 1, 2025) (observing the same). 13 There being no other grounds for finding substantive 14 unconscionability, the court concludes that the Delegation Clause 15 is not substantively unconscionable. Accordingly, the Delegation 16 Clause is not unconscionable. See Taylor, 2023 WL 171359, at *9 17 (unconscionability requires both procedural and substantive 18 unconscionability). 19 D. Dismissal of Class Claims 20 Defendants also request the court to strike plaintiff’s 21 class action allegations pursuant to the Agreement’s class action 22 waiver. (See Docket Nos. 12 at 13-14; 13-2 at 4 (Agreement’s 23 class action waiver provision).) 24 The Supreme Court has held that class action waivers in 25 arbitration agreements are enforceable. See Epic Sys. Corp. v. 26 Lewis, 584 U.S. 487, 502-03 (2018). “Correspondingly, such 27 waivers are routinely upheld by courts in this circuit,” 28 ee NE II I IE IEE IGE IE OSU) IIE EO including this court. Diaz, 2026 WL 495233, at *5 (collecting cases). The court will accordingly enforce the Agreement’s class action waiver here. IT IS THEREFORE ORDERED that plaintiffs’ motion to ° remand (Docket No. 15) be, and the same hereby is, DENIED. ° IT IS FURTHER ORDERED that defendants’ motion to compel arbitration (Docket No. 12) be, and the same hereby is, GRANTED. This action is hereby STAYED pending arbitration. ° The Clerk shall close this file administratively, subject to it being reopened upon the application of either party after arbitration has been fully completed. 12

Dated: April 30, 2026 WILLIAMB.SHUBB ©...” 14 UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14