Mallia v. Drybar Holdings, LLC

• Court: District Court, D. Nevada
• Decided: March 16, 2020
• Docket: 2:19-cv-00179
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 SALVATORE MALLIA, JR., Case No. 2:19-cv-00179-RFB-DJA

8 Plaintiff(s), ORDER

9 v.

10 DRYBAR HOLDINGS, LLC; COURTNEY BARFIELD; KARRIE MARTINEZ; PATRICE 11 CAMPBELL; RENEE ATWOOD; ZENA LONG 12

13 Defendant(s).

14 15 I. INTRODUCTION 16 Before the Court are two motions: Defendants Renee Atwood, Patrice Campbell, Drybar 17 Holdings, LLC, Zena Long, Karrie Martinez’s (collectively “Defendants”) Motion to Compel 18 Arbitration, and Plaintiff Salvatore Mallia, Jr.’s (“Mallia”) Motion for Leave to File a 19 Supplemental Memorandum. ECF Nos. 32, 55. For the following reasons, the Court grants 20 Defendants’ Motion and denies Plaintiff’s motion. 21 22 II. PROCEDURAL BACKGROUND 23 Plaintiff Salvatore Mallia, Jr. filed his complaint in this matter on January 30, 2019. ECF 24 25 No. 1. The complaint asserts claims against Defendants for violations of the Americans with 26 Disabilities Act (“ADA”) (42 U.S.C. §12101 et seq); Title VII of the Civil Rights Act of 1964 (42 27 U.S.C. § 12101 et seq), and Nevada state law. Id. Defendants answered the complaint on May 14, 28 2019. ECF No. 30. Defendants also moved to compel arbitration. ECF No. 32. A response and 1 reply were filed. ECF Nos. 35, 37. Plaintiff then moved to file a supplemental memorandum. ECF 2 No. 55. A response and reply to this motion were also filed. ECF Nos. 60, 61. 3 III. FACTUAL BACKGROUND 4 Plaintiff Salvatore Mallia, Jr., (“Mallia”) was first employed by Defendant Drybar 5 6 Holdings, LLC (“Drybar”) in August 2017. He was terminated later in the year. Mallia now brings 7 various claims related to alleged discrimination he experienced while in Drybar’s employ. 8 Defendants maintain that Mallia signed a binding arbitration agreement when Drybar first hired 9 him. Because Drybar has a practice of providing any employment-related paperwork 10 electronically, signatures of the same appear stamped on the bottom of applicable documents. 11 12 Mallia’s signature appears on the bottom of the electronic version of the Arbitration Agreement 13 on August 30, 2017. The Arbitration Agreement is a standalone contract that “applies without 14 limitation, to disputes with any entity or individual arising out of or related to . . . the employment 15 relationship or the termination of that relationship.” ECF No. 34-1. The agreement gave 16 prospective employees thirty days from the date of receipt of the agreement to opt-out. To opt-out, 17 18 an employee had to either submit a signed and dated statement on an “Arbitration Agreement Opt 19 Out Form” obtainable from Drybar’s Human Resources Department, or submit to 20 hr@thedrybar.com written notice that they were opting out, or send an email to 21 optout@thedrybar.com notifying Drybar’s HR of the intent to dropout. To support their motion, 22 Defendants attach the declarations of a Senior Manager within Drybar’s Human Resources 23 24 Administration, which explains that Drybar maintains all job-related paperwork online, including 25 “New Hire Paperwork” through a program called “My Staffing Pro,” which allows employees to 26 sign and acknowledge any job-related paperwork through “eSign,” which stamps an electronic 27 signature image at the bottom of documents that require signatures. The documents indicate that 28 1 Mallia, Jr. electronically signed the Arbitration Agreement on August 30, 2017.1 2 IV. LEGAL STANDARD 3 a. Motion to Compel Arbitration 4 The Federal Arbitration Act (“FAA”) provides that a “written provision in . . . a contract 5 evidencing a transaction involving commerce to settle by arbitration a controversy thereafter 6 arising . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or 7 in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA provides two methods for 8 enforcing arbitration: (1) an order compelling arbitration of a dispute; and (2) a stay of pending 9 litigation raising a dispute referable to arbitration. 9 U.S.C §§ 3, 4. 10 “By its terms, the Act leaves no place for the exercise of discretion by a district court, but 11 instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to 12 which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 13 213, 218 (1985). The FAA limits the district court's role to determining (1) whether the parties 14 agreed to arbitrate, and, if so, (2) whether the scope of that agreement to arbitrate encompasses the 15 claims at issue. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175 (9th Cir. 2014). 16 “The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope 17 of arbitrable issues should be resolved in favor of arbitration . . . .” Moses H. Cone Mem’l Hosp. 18 v. Mercury Const. Corp., 460 U.S. 1, 24–25 (1983). Thus, “[t]he standard for 19 demonstrating arbitrability is not a high one; in fact, a district court has little discretion to deny 20 an arbitration motion, since the Act is phrased in mandatory terms.” Republic of Nicar. v. Std. 21 Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991). In fact, “Section 2 of the FAA requires courts to 22 enforce agreements to arbitrate according to their terms, in order to place an arbitration agreement 23 upon the same footing as other contracts and to overrule the judiciary's longstanding refusal to 24 enforce agreements to arbitrate.” O'Conner v. Uber Technologies, Inc., 904 F.3d 1087, 1093 (9th 25 Cir. 2018) (internal quotations and citations omitted). However, “arbitration is a matter of contract 26 and a party cannot be required to submit to arbitration any dispute which he has not agreed so to 27

28 1 The declaration states that the agreement was signed on August 30, 2018, but this appears to be a typo as the records list the date as August 30, 2017. 1 submit.” AT & T Technologies, Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648 2 (1986) (internal quotation omitted). 3 The determination of whether a particular issue should be decided by the arbitrator rather 4 than the court is governed by federal law. Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 5 1126, 1130 (9th Cir. 2000). However, when deciding whether the parties agreed to arbitrate a 6 certain matter, courts generally apply ordinary state law principles of contract interpretation. First 7 Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). 8 Section 3 of the FAA provides for a stay of legal proceedings whenever the issues in a case 9 are within the reach of an arbitration agreement. 9 U.S.C. § 3. Although the statutory language 10 supports a mandatory stay, the Ninth Circuit has interpreted this provision to allow a district court 11 to dismiss the action. See Sparling v. Hoffman Const. Co., 864 F.2d 635, 638 (9th Cir. 1988). A 12 request for a stay is not mandatory. Martin Marietta Aluminum, Inc. v. Gen. Elec. Co., 586 F.2d 13 143, 147 (9th Cir. 1978). 14 V. DISCUSSION 15 Mallia disputes his consent to the arbitration and argues in effect that the Arbitration 16 Agreement is procedurally unconscionable because it was included as part of an online system that 17 did not draw Mallia’s attention to the particular agreement. The Court finds that the evidence 18 indicates that Mallia did consent to the agreement, and that the contract is neither procedurally nor 19 substantively unconscionable, and therefore the Court will grant the motion to compel. 20 a. Consent 21 It is not seriously disputed2 that Mallia used Drybar’s e-sign software to sign new employee 22 paperwork, including the Arbitration Agreement. The Court finds this sufficient to establish that 23 Mallia consented to the Arbitration Agreement. Mallia argues that he did not have specific 24 knowledge of signing the particular arbitration agreement, and that the contents of the arbitration 25 agreement were not specifically pointed out to him. But under Nevada law, one who signs an 26 agreement is presumed to know the contents therein, and Mallia offers no evidence that Defendants 27 procured his “eSign” signature through fraud or another wrongful act. See Campanelli v.

28 2 Mallia states in his declaration that he s“vaguely” recalls using an online system to sign documents with Drybar. Decl. Salvatore Mallia, Jr, ECF No. 35-1. 1 Conservas Altamire, S.A.,, 477 P.2d 870, 872 (Nev. 1970)(“He who signs or accepts a written 2 contract, in the absence of fraud or other wrongful act on the part of another contracting party, is 3 conclusively presumed to know its contents and to assent to them.”)(internal quotations omitted). 4 Accordingly, the Court finds that Mallia consented to the agreement. 5 b. Procedural Unconscionability 6 An arbitration clause is procedurally unconscionable under Nevada law, “when a party 7 lacks a meaningful opportunity to agree to the clause terms either because of unequal bargaining 8 power, as in an adhesion contract, or because the clause and its effects are not readily ascertainable 9 upon a review of the contract.” KJH & RDA Investor Group, LLC v. Eighth Judicial Dist. Court 10 of State ex rel. Cty. of Clark, 281 P.3d 1192 (Nev. 2009) (internal citations omitted). “The gist of 11 this element ‘focuses on two factors: oppression and surprise.’” Id. 12 In this case, the Court does not find that the Arbitration Agreement was procedurally 13 unconscionable. The Arbitration Agreements states in bold at the top that “This dispute resolution 14 agreement is a contract and covers important issues relating to your rights . . . You are free to seek 15 assistance from independent advisors of your choice outside the Company or to refrain from doing 16 so if that is your choice.” That the contract is pro forma does not necessarily establish procedural 17 unconscionability and the Nevada Supreme Court has not applied the adhesive contract doctrine 18 to employment agreements. See Kindred v. Second Jud. Dist. Court, 996 P.2d 903, 907 (Nev. 19 2000) (“We have never applied the adhesion contract doctrine to employment cases.”). Mallia 20 argues that the arbitration was insufficiently “conspicuous.” However, the Arbitration Agreement 21 was its own standalone document, not a paragraph buried in unrelated text, which undermines any 22 argument as to its lack of conspicuousness. See U.S. Home Corp. v. Michael Ballesteros Tr., 415 23 P.3d 32, 41 (Nev. 2018). There is also no indication that employees were forced to sign the 24 agreement without adequate time to review its contents. Accordingly, the Court does not find the 25 contract procedurally unconscionable. 26 c. Substantive Unconscionability 27 A contract may be substantively unconscionable when it contains oppressive terms or is 28 one-sided. Gonski v. Second Judicial Dist. Court of State ex rel Washoe, 245 P.3d 1164, 1169 1 (Nev. 2010) overruled on other grounds by U.S. Home Corp. v. Michael Ballestreros Trust, 415 2 P.3d 32 (Nev. 2018). The Court does not find the Arbitration Agreement to be oppressive or one- 3 sided. The Arbitration Agreement describes the arbitration procedures in clear language that 4 provides both the employee and employer with an opportunity to arbitrate. ECF No. 34-1. (“Except 5 as otherwise stated in this Agreement, you and the Company agree that any legal dispute or 6 controversy covered by this agreement . . . shall be resolved by binding arbitration.”). The 7 agreement requires each party to bear its own costs. Id. The arbitration provision does include a 8 class action waiver, but the Supreme Court has held that such provisions are not per se 9 unconscionable and that state law cannot render them so. AT&T Mobility LLC v. Concepcion, 10 563 U.S. 333, 348-49 (2011). The Court therefore does not find the contract substantively 11 unconscionable. 12 b. Motion for Leave to File Supplemental Memorandum 13 After the motion to compel was fully briefed, Mallia submitted a motion for leave to file a 14 supplemental memorandum in light of a newly discovered declaration from another former Drybar 15 employee and HR manager. Mallia argues that this declaration should be considered by the Court 16 as it further demonstrates that the case should not be subject to arbitration. 17 “A party may not file supplemental pleadings, briefs, authorities, or evidence without leave 18 of court granted for good cause.” LR 7-2(g). The Court will typically only find good cause under 19 LR 7-2(g) if there is a showing that the party seeking good cause was reasonably diligent. Mallia 20 maintains that he has been diligent in submitting this new declaration, signed in September 2019, 21 and that Mallia’s new counsel only appeared on November 6, 2019 and immediately filed the 22 motion the next day. 23 The Court denies the motion because the “new evidence” does not change the Court’s 24 analysis, and allowing supplemental briefing on an irrelevant issue would be futile. The only 25 paragraph of the seven-page declaration relevant to the question of arbitration is a statement that 26 when the former manager was trained on how to review paperwork with new hires, she was told 27 to “gloss over” the Arbitration Agreement, and “just tell new hires to “sign here, and don’t worry 28 about it.” This declaration is not particularly useful to the Court because it does not establish 1 | particular facts as to what happened in Mallia’s specific situation. Indeed, the HR manager does 2 | noteven establish that she was the manager who went through Mallia’s arbitration agreement with 3 | him. Furthermore, additional information as to the circumstances of Mallia’s signing of the 4 contract only speaks to possible procedural unconscionability of the contract, and an arbitration 5 | agreement must be both procedurally and substantively unconscionable before the Court will strike 6| it. U.S. Home Corp., 415 P.3d at 40 (‘Nevada law requires both procedural and substantive 7 | unconscionability to invalidate a contract as unconscionable.”). The Court therefore denies the 8 | motion for supplemental briefing. 9 The Court notes that the arbitration agreement provides that any dispute, including disputes 10 as to whether there is an agreement to arbitrate, must be submitted to arbitration. The Court thus 11 | finds that the Arbitration Agreement is broad enough to require that all of Mallia’s claims are 12 | arbitrated. The Court therefore exercises its discretion as articulated by the Ninth Circuit in 13 | Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635, 638 (9th Cir. 1988) to dismiss all claims in 14 this action. 15 VI. CONCLUSION 16| IT IS THEREFORE ORDERED that Defendants’ Motion to Compel Arbitration, (ECF No. 17 | 32)is GRANTED 18 IT IS FURTHER ORDERED Plaintiff's Motion for Leave to File a Supplemental 19 | Memorandum (ECF No. 55) is DENIED. 20 IT IS FURTHER ORDERED that all claims in this case are dismissed as the Court finds that they are subject to mandatory arbitration. 22 The Clerk of the Court is instructed to close the case. 23 24 DATED March 16, 2020. 25 AS 26 RICHARD F. BOULWARE, II 07 UNITED STATES DISTRICT JUDGE 28

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