Makenzie Martinez v. Wells Fargo Bank, N.A.

• Court: District Court, N.D. California
• Decided: May 28, 2026
• Docket: 3:25-cv-09878
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 San Francisco Division 11 MAKENZIE MARTINEZ, Case No. 25-cv-09878-LB

12 Plaintiff, ORDER GRANTING MOTION TO COMPEL ARBITRATION 13 v. Re: ECF No. 18 14 WELLS FARGO BANK, N.A., 15 Defendant. 16 17 INTRODUCTION 18 The plaintiff sued Wells Fargo Bank, N.A., in state court, alleging claims for violations of the 19 Fair Employment and Housing Act (FEHA), Cal. Gov. Code § 12900, et seq., and wrongful 20 termination. Wells Fargo removed the case to federal court and moved to compel arbitration. The 21 plaintiff contends that the court should deny the motion because (1) Wells Fargo waived its right 22 to compel arbitration by removing the case, consenting to magistrate-judge jurisdiction, and 23 participating in initial disclosures and (2) the arbitration agreement is unconscionable. 24 The court grants the motion and compels arbitration. 25 26 27 1 STATEMENT 2 In August 2024, Wells Fargo hired the plaintiff as a teller at a branch in Concord, California.1 3 As part of the onboarding process, the plaintiff electronically signed her offer letter along with 4 other employment-related documents, including an arbitration agreement and an agreement 5 addressing confidentiality and trade secrets.2 The plaintiff does not remember signing the 6 arbitration agreement.3 7 The arbitration agreement states that “any legal Claims arising out of [the plaintiff’s] application 8 for employment, employment, or separation from employment with Wells Fargo shall be resolved 9 by final and binding arbitration” and that arbitration will be through a single, neutral arbitrator 10 under the American Arbitration Association’s Employment Arbitration Rules and Mediation 11 Procedures, which were made available to the plaintiff in a hyperlink embedded in the agreement.4 12 The agreement covers claims of “discrimination, harassment, retaliation, tortious conduct, wrongful 13 discharge, breach of contract, promissory estoppel, expense reimbursement, wages, compensation, 14 or claims for violations of any federal, state, or local statute, regulation, or common law” against 15 “any Wells Fargo entity, its officers, directors, shareholders, employees, agents.”5 16 The agreement also contains a class-action waiver, stating that claims “must be brought in 17 arbitration on an individual basis only, and [the plaintiff] agree[s] to waive the right to initiate or 18 participate in a class, collective, or representative action (collectively ‘Class Action’).”6 The 19 agreement states that it “does not prevent either party from seeking temporary injunctive relief in 20 court as long as that action is brought on an individual basis.”7 21

22 1 Compl. – ECF No. 1-1 at 5 (¶ 10); Nikolopoulos Decl. – ECF No. 18-3 at 3 (¶ 6). Citations refer to material in the Electronic Case File (ECF); pinpoint citations are to the ECF-generated page numbers 23 at the top of documents. 24 2 Nikolopoulos Decl. – ECF No. 18-3 at 3 (¶ 6); Arbitration & Trade Secrets Agreements, Exs. 1–2 to id. – ECF No. 18-3 at 6–20. 25 3 Pl.’s Decl. – ECF No. 19-2 at 2 (¶ 3). 26 4 Arbitration Agreement, Ex. 1 to Nikolopoulos Decl. – ECF No. 18-3 at 6. 5 Id. 27 6 Id. 1 The trade-secrets agreement states that the plaintiff agrees that any violation of the agreement 2 by her “should be the proper subject for immediate injunctive relief.”8 3 The plaintiff was terminated in November 2024.9 She filed her complaint against Wells Fargo 4 in the Contra Costa County Superior Court in October 2025, alleging claims for violations of 5 FEHA and wrongful termination.10 Before filing her case, the plaintiff shared a draft of her 6 complaint with Wells Fargo in May 2025 as part of efforts to resolve her case without litigation.11 7 Wells Fargo answered the complaint in November 11, 2025, and removed the case to federal court 8 on November 17, 2025.12 The plaintiff served her initial disclosures on December 17, 2025. On 9 December 19, 2025, Wells Fargo provided its initial disclosures and requested that the plaintiff 10 stipulate to arbitration, which she declined.13 11 The parties consented to magistrate-judge jurisdiction.14 28 U.S.C. § 636(c)(1). The court can 12 decide the motion without oral argument. Civil L.R. 7-1(b). 13 14 ANALYSIS 15 The parties dispute whether Wells Fargo waived the right to compel arbitration and whether 16 the arbitration agreement is unconscionable.15 The answer to both is no. 17 18 1. Waiver 19 The plaintiff asserts that Wells Fargo waived its right to compel arbitration by waiting to move 20 to do so until after Wells Fargo had participated in prelitigation discussions, removed the case to 21 22 8 Trade-Secrets Agreement, Ex. 1 to id. – ECF No. 18-3 at 20. 9 Compl. – ECF No. 1-1 at 7 (¶ 21). 23 10 See id. 24 11 Purcell Decl. – ECF No. 19-1 at 2 (¶ 2). 25 12 Answer – ECF No. 1-3; see Dkt. 13 Purcell Decl. – ECF No. 19-1 at 2 (¶¶ 3–5). 26 14 Consents – ECF Nos. 8, 10. 27 15 The plaintiff does not dispute that she signed the agreement despite not remembering doing so. 1 federal court, and consented to magistrate judge jurisdiction and after the plaintiff had submitted 2 her initial disclosures.16 Wells Fargo responds that this is insufficient to show waiver of the right 3 to compel arbitration.17 4 “‘[T]he test for waiver of the right to compel arbitration consists of two elements: 5 (1) knowledge of an existing right to compel arbitration; and (2) intentional acts inconsistent with 6 that existing right.’” In re Google Assistant Priv. Litig., No. 19-CV-04286-BLF, 2024 WL 251407, 7 at *3 (N.D. Cal. Jan. 23, 2024) (quoting Hill v. Xerox Bus. Servs., LLC, 59 F.4th 457, 468 (9th Cir. 8 2023)). “With respect to the first prong of this test, knowledge of an existing right to compel 9 arbitration does not require ‘a present ability to move to enforce an arbitration agreement.’” Id. 10 (quoting Hill, 59 F.4th at 469). “With respect to the second prong, ‘[t]here is no concrete test to 11 determine whether a party has engaged in acts inconsistent with its right to arbitrate; rather, we 12 consider the totality of the parties’ actions.’” Id. (quoting Hill, 59 F.4th at 471) (cleaned up). “Under 13 Ninth Circuit precedent, ‘a party generally acts inconsistently with exercising the right to arbitrate 14 when it (1) makes an intentional decision not to move to compel arbitration and (2) actively litigates 15 the merits of a case for a prolonged period of time in order to take advantage of being in court.’” Id. 16 (cleaned up) (quoting Armstrong v. Michaels Stores, Inc., 59 F.4th 1011, 1015 (9th Cir. 2023). 17 The party opposing arbitration bears the burden of establishing waiver, but that burden is not 18 “heavy.” Id. (quoting Armstrong, 59 F.4th at 1014). “[T]he burden for establishing waiver of an 19 arbitration agreement is the same as the burden for establishing waiver in any other contractual 20 context.” Id. (quoting Armstrong, 59 F.4th at 1014). 21 The plaintiff has not met her burden of demonstrating waiver. Simply put, the conduct she 22 points to — engaging in prelitigation discussions, removing the case to federal court, consenting 23 to magistrate-judge jurisdiction, and participating in initial disclosures — is not active litigation of 24 the merits of a case for a prolonged period but rather the first steps of litigation. The plaintiff 25 points to no case stating otherwise. See Martin v. Yasuda, 829 F.3d 1118, 1126 (9th Cir. 2016) 26

27 16 Opp’n – ECF No. 19 at 7–9. 1 (waiver where the defendant spent seventeen months litigating the case, including by filing a 2 motion to dismiss, entering into a protective order, answering discovery, and preparing for and 3 conducting a deposition); Plows v. Rockwell Collins, Inc., 812 F. Supp. 2d 1063, 1067 (C.D. Cal. 4 2011) (waiver where the defendant, in addition to removing the case to state court, served 5 “numerous interrogatories,” subpoenaed employment records, sought and received transfer of 6 venue, participated in case management conferences, and entered into a protective order); Hill, 7 59 F.4th at 473–74 (waiver where the defendant “embarked on a six-year appellate journey aimed 8 at judicially resolving the merits—the legal heart—of the class members’ claims” and requested 9 “extensive discovery on unnamed parties” (cleaned up)). 10 11 2. Unconscionability 12 Under the Federal Arbitration Act (FAA), “arbitration is a matter of contract, and courts must 13 enforce arbitration contracts according to their terms.” Henry Schein, Inc. v. Archer and White Sales, 14 Inc., 586 U.S. 63, 67 (2019) (citing Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 67 (2010)). The 15 FAA provides that arbitration agreements are unenforceable “upon such grounds as exist at law or in 16 equity for the revocation of any contract.” 9 U.S.C. § 2. “[G]enerally applicable contract defenses, 17 such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements 18 without contravening” federal law. Doctor’s Assoc., Inc. v. Casarotto, 517 U.S. 681, 687 (1996). 19 “Under California law, ‘the party opposing arbitration bears the burden of proving any defense, such 20 as unconscionability.’” Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1260 (9th Cir. 2017) (quoting 21 Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 236 (2012)). 22 In California, contractual unconscionability has procedural and substantive components. 23 Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 114 (2000). “[T]he former 24 focus[es] on oppression or surprise due to unequal bargaining power, the latter on overly harsh or 25 one-sided results.” Id. (cleaned up). “Procedural and substantive unconscionability ‘need not be 26 present in the same degree.’” Poublon, 846 F.3d at 1260 (citing Sanchez v. Valencia Holding Co., 61 27 Cal. 4th 899, 910 (2015)). “Rather, there is a sliding scale: ‘the more substantively oppressive the 1 contract term, the less evidence of procedural unconscionability is required to come to the conclusion 2 that the term is unenforceable, and vice versa.’” Id. (quoting Armendariz, 24 Cal. 4th at 114). 3 The plaintiff contends that the arbitration agreement is procedurally unconscionable because it 4 is a contract of adhesion.18 Wells Fargo responds that adhesion alone indicates only a low degree 5 of procedural unconscionability.19 6 Procedural unconscionability focuses on the circumstances surrounding the negotiation of the 7 contract. Gatton v. T–Mobile USA, Inc., 152 Cal. App. 4th 571, 581 (2007). “Oppression arises 8 from an inequality of bargaining power which results in no real negotiation and an absence of 9 meaningful choice.” Bruni v. Didion, 160 Cal. App. 4th 1272, 1288 (2008) (cleaned up). “Surprise 10 involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in a 11 prolix printed form drafted by the party seeking to enforce the disputed terms.” Id. (cleaned up). 12 Here, the arbitration agreement has minimal procedural unconscionability because “adhesion 13 alone generally indicates only a low degree of procedural unconscionability.” Ramirez v. Charter 14 Commc’ns, Inc., 16 Cal. 5th 478, 494 (2024). 15 Turning to substantive unconscionability, the plaintiff asserts that the arbitration agreement is 16 substantively unconscionable because it (1) requires the plaintiff to arbitrate all claims against “a 17 broad group of persons on the employer’s side,” (2) contains an injunctive-relief carve out only for 18 Wells Fargo, and (3) waives the plaintiff’s right to bring PAGA claims.20 Wells Fargo responds 19 that (1) any lack of mutuality is mitigated by the agreement’s applying only to claims arising out 20 of the plaintifff’s employment, (2) the plain language of the agreement allows both parties to seek 21 injunctive relief, and (3) the class-action waiver does not apply to PAGA claims.21 22 The arbitration agreement is not substantively unconscionable.

23 24 25 26 18 Opp’n – ECF No. 19 at 10–11. 19 Reply – ECF No. 20 at 5–6. 27 20 Opp’n – ECF No. 19 at 11–18. 1 First, the plaintiff’s concerns about mutuality are mitigated by the agreement’s stating that it 2 applies only to claims arising out of her “application for employment, employment, or separation 3 from employment with Wells Fargo.”22 The plaintiff cites Cook v. University of Southern 4 California in support, but the case is distinguishable. 102 Cal. App. 5th 312 (2024). In Cook, the 5 arbitration agreement applied generally to all claims by the employee against the employer 6 regardless of whether the claim arose after employment had ended. Id. at 317. Conversely, the 7 arbitration agreement’s coverage is limited to issues relating to the plaintiff’s employment.23 8 Second, the arbitration agreement does not contain a one-sided injunctive carve out. It states 9 that it “does not prevent either party from seeking temporary injunctive relief.”24 Cf. Carbajal v. 10 CWPSC, Inc., 245 Cal. App. 4th 227, 249 (2016) (arbitration agreement was substantively 11 unconscionable where it require the plaintiff to arbitrate “any and all disputes” with the defendant 12 while allowing the defendant to “obtain an injunction from a court of competent jurisdiction”). 13 The plaintiff also points to the trade-secrets agreement’s stating that the plaintiff agrees that any 14 violation of it should be “the proper subject for immediate injunctive relief.”25 But this provision 15 does not prevent the plaintiff from seeking injunctive relief or affect her ability to bring claims 16 against Wells Fargo. 17 Finally, the class-action waiver does not waive PAGA claims. Wells Fargo represents that the 18 provision only applies to class actions and does not preclude PAGA claims.26 While the waiver 19 provision states generally that employees wave the right to initiate “class, collective, or 20 representative action,” it immediately clarifies in a parenthetical that this means “collectively 21 ‘Class Action.’”27 Even if this provision did attempt to waive the plaintiff’s ability to bring PAGA 22 23

24 22 Arbitration Agreement, Ex. 1 to Nikolopoulos Decl. – ECF No. 18-3 at 6. 25 23 Reply – ECF No. 20 at 6–7. 26 24 Arbitration Agreement, Ex. 1 to Nikolopoulos Decl. – ECF No. 18-3 at 6. 25 Trade-Secrets Agreement, Ex. 1 to Nikolopoulos Decl. – ECF No. 18-3 at 20. 27 26 Reply – ECF No. 20 at 7–8. 1 claims, the court would exercise its discretion to sever the offending provision. See Armendariz, 2 |} 24 Cal. 4th at 121-22; Newton v. Am. Debt Servs., Inc., 549 F. App’x 692, 695 (9th Cir. 2013). 3 4 CONCLUSION 5 The court compels arbitration and stays the case pending arbitration. Smith v. Spizziri, 601 6 || U.S. 472, 474, 476-78 (2024) (per curiam) (requiring stay). This resolves ECF No. 18. 7 IT IS SO ORDERED. 8 Dated: May 27, 2026 Lil EC 9 Oe LAUREL BEELER 10 United States Magistrate Judge 1] a 12 2

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