Nathan Munson v. Hungry Marketplace, Inc., et al.

• Court: District Court, N.D. California
• Decided: June 3, 2026
• Docket: 3:25-cv-06789
• Status: Unknown

Opinion

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 NATHAN MUNSON, Case No. 25-cv-06789-AMO

9 Plaintiff, ORDER GRANTING MOTION TO 10 v. COMPEL ARBITRATION AND STAY ACTION 11 HUNGRY MARKETPLACE, INC., et al., Re: Dkt. No. 16 Defendants. 12

13 14 This is a wage, hour, and discrimination action. Before the Court is Defendants Hungry 15 Marketplace, Inc. and Naturebox, Inc.’s motion to compel arbitration and stay proceedings. 16 Having read the parties’ papers and carefully considered their arguments therein, as well as the 17 relevant legal authority, the Court GRANTS the motion for the following reasons. 18 I. BACKGROUND 19 Nathan Munson worked for Hungry Marketplace from 2022 to 2025. Dkt. No. 16-2 20 (“Grass Decl.”) ¶ 3. Naturebox is a wholly owned subsidiary of Hungry Marketplace. Id. ¶ 1. 21 According to Munson’s complaint, Hungry Marketplace provides catering services and event 22 solutions in twelve U.S. cities, while Naturebox makes and delivers healthy snacks to businesses 23 and homes across the contiguous United States. Dkt. No. 1-2 ¶¶ 4-5. 24 Munson alleges he was always a Hungry Marketplace employee, while Defendants 25 contend he started as an independent contractor and later transitioned to be an employee. Id. ¶ 14; 26 Grass Decl. ¶ 3. Munson started working for Hungry Marketplace on September 20, 2022. Grass 27 Decl. ¶ 3. Defendants contend that Munson signed a “Hungry Marketplace Inc Consulting 1 arbitration provision. Dkt. No. 16-3 ¶¶ 24-24.5. Defendants additionally assert that, on the same 2 day, Munson signed a separate Dispute Resolution Agreement concerning arbitration. Grass Decl. 3 ¶ 8; Dkt. No. 16-4. According to Defendants, this second agreement was inadvertently uploaded 4 for Munson’s signature, as it was only intended to apply to Hungry Marketplace employees. 5 Grass Decl. ¶ 8. The arbitration provisions in the two agreements differ. The most salient 6 distinction is that the Consulting Agreement splits arbitration fees between the parties, while the 7 Dispute Resolution Agreement requires Hungry Marketplace to bear all arbitration fees in 8 California. Compare Dkt. No. 16-3 ¶ 24.4, with Dkt. No. 16-4 at 4.1 9 Munson was later hired as a Hungry Marketplace employee on January 20, 2023. Grass 10 Decl. ¶ 10. Defendants assert that on January 23, 2023, Munson signed a Dispute Resolution 11 Agreement concerning arbitration. Id. ¶¶ 11-13; Dkt. Nos. 16-5, 16-6. Except for the removal of 12 an opt-out provision and the addition of an electronic signature provision, this agreement was 13 substantively identical to the first Dispute Resolution Agreement. Compare Dkt. No. 16-4, with 14 Dkt. No. 16-5. 15 Munson’s lawsuit alleges various wage and hour violations, some derived from his alleged 16 misclassification as an independent contractor, in addition to disability discrimination, retaliation, 17 breach of contract, and tort claims. Dkt. No. 1-2. 18 II. DISCUSSION 19 A. Applicable Law 20 As an initial matter, the Federal Arbitration Act (“FAA”) governs this motion. The FAA 21 applies to any arbitration agreement “evidencing a transaction involving commerce,” which 22 expansively covers any transaction that Congress can regulate under the Commerce Clause. 9 23 U.S.C. § 2; Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 273-82 (1995). According 24 to Munson’s allegations, Defendants provide catering, event, and food delivery services across the 25 United States. Dkt. No. 1-2 ¶¶ 4-5. Munson’s work was part of Defendants’ interstate commerce. 26 See Dkt. No. 22-1 ¶¶ 6, 10; Allied-Bruce, 513 U.S. at 282; Citizens Bank v. Alafabco, Inc., 539 27 1 U.S. 52, 57 (2003). Though Munson analogizes this case to Hoover v. Am. Income Life Ins. Co., 2 206 Cal. App. 4th 1193, 1207 (2012), his own statements demonstrate his participation in 3 interstate commerce, unlike the extremely bare-bones evidence there. Additionally, each of the 4 arbitration agreements at issue expressly refer to the FAA. Dkt. No. 16-3 ¶ 24.1 (“pursuant to the 5 Federal Arbitration Act”); Dkt. No. 16-4 at 3 (“[T]his Agreement is governed by the Federal 6 Arbitration Act . . . .”); Dkt. No. 16-5 at 3 (same). The plain language of these agreements would 7 also require applying the FAA. See Biller v. Toyota Motor Corp., 668 F.3d 655, 662-63 (9th Cir. 8 2012). 9 The FAA’s transportation worker exemption does not apply to Munson. This exemption 10 requires considering (1) the class of workers that a plaintiff belongs to; and (2) whether that class 11 of workers plays a “direct and necessary” role in interstate commerce while being “‘actively 12 engaged’ and ‘intimately involved with’ transportation” of goods. Ortiz v. Randstad Inhouse 13 Servs., LLC, 95 F.4th 1152, 1161-62 (9th Cir. 2024) (quoting Sw. Airlines Co. v. Saxon, 596 U.S. 14 450, 458 (2022)). The party opposing arbitration bears the burden of showing the exemption 15 applies. Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190, 1194 (9th Cir. 2024). At the 16 first step, Munson has not attempted to explain what class of workers he belongs to. At the second 17 step, Munson describes, among other duties, delivering food “shipped in from vendors such as 18 Costco, Sam’s Club, and other suppliers.” Dkt. No. 22-1 ¶ 6. Even if that shows that Munson 19 sometimes transported goods that were shipped in interstate commerce, see Capriole v. Uber 20 Techs., Inc., 7 F.4th 854, 864 (9th Cir. 2021) (Uber drivers, who sometimes perform interstate 21 trips, were not exempted transportation workers), Munson would have been an “unaffiliated, 22 independent participant[]” in transporting the food bought from third-party suppliers “rather than 23 an integral part of a single, unbroken stream of interstate commerce.” See id. at 867 (citation 24 omitted). If transporting goods bought from third-party suppliers alone was enough to apply the 25 transportation worker exemption, this narrowly construed exemption would swallow the FAA’s 26 general rule. See Cir. City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001). 27 Since the FAA applies, this Court’s role is limited to certain gateway issues. Caremark, 1 these gateway issues to an arbitrator. Id. If they do so, a court’s role is only to determine (1) if an 2 agreement to arbitrate was formed; and (2) if the delegation clause is enforceable. Id. at 1030. 3 B. Formation of Arbitration Agreements 4 Because Munson denies signing the arbitration agreements, California law requires Hungry 5 Marketplace to show by a preponderance of the evidence that Munson signed the documents. See 6 Espejo v. S. Cal. Permanente Med. Grp., 246 Cal. App. 4th 1047, 1060 (2016). Electronic 7 signatures are sufficient so long as the defendant shows it was “the act of the person”; the burden 8 to make that showing is “not great.” Cal. Civ. Code § 1633.9(a); Ruiz v. Moss Bros. Auto Grp., 9 232 Cal. App. 4th 836, 844-45 (2014). Though whether Defendants have met their burden of 10 proof is a question of state law, the admissibility of evidence on this question is governed by the 11 Federal Rules of Evidence. See Wray v. Gregory, 61 F.3d 1414, 1417 (9th Cir. 1995) (holding the 12 Federal Rules of Evidence govern diversity cases unless a state evidence rule has substantive 13 effect). 14 Defendants have met their burden of proof to show that Munson signed all three relevant 15 agreements. Starting with the first two agreements, Hungry Marketplace CEO Jeff Grass 16 explained that Hungry Marketplace “upload[ed] documents . . . through the HelloSign electronic 17 signature portal (now known as Dropbox Sign), which is then accessed by the consultant through a 18 link in an email that is sent directly to their email address.” Grass Decl. ¶¶ 5-6, 8. The HelloSign 19 audit trails indicate that both documents were sent to a Yahoo email address starting with “n” and 20 signed on September 20, 2022. Dkt. No. 16-3 at 13; Dkt. No. 16-4 at 6. As to the final agreement, 21 Grass similarly explained that as part of employee onboarding, Hungry Marketplace “will upload 22 documents, including a dispute resolution agreement through the ADP onboarding electronic 23 signature portal, which is then accessed by the employee through a link in an email that is sent 24 directly to their email address.” Grass Decl. ¶ 12-13. The ADP document audit history indicates 25 that a user named “NMUNSON11” signed this final agreement on January 23, 2023. Dkt. No. 16- 26 6 at 2. This evidence is sufficient to meet Defendants’ burden of proof. See Ugalde v. Syngenta 27 Flowers, LLC, No. 24-CV-07568-EKL, 2025 WL 1828513, at *3 (N.D. Cal. July 1, 2025) (citing 1 of these documents, “courts have consistently rejected the notion that an employee’s failure to 2 recall signing an agreement establishes lack of an agreement.” See Gonzalez v. Peak Cal. Rest. 3 Grp., LLC, No. 25-CV-04068-AMO, 2026 WL 765325, at *3 (N.D. Cal. Mar. 18, 2026) (citations 4 omitted); Dkt. No. 22-1 ¶¶ 3, 11. 5 Munson raises several objections to Defendants’ proffered evidence, each of which is 6 overruled. First, Munson contends that Grass lacked personal knowledge to declare whether 7 Munson signed the agreements. However, “[a]n individual’s job duties can establish sufficient 8 knowledge for authenticating an agreement.” Gonzalez, 2026 WL 765325, at *2 (citing 9 Barthelemy v. Air Lines Pilots Ass’n, 897 F.2d 999, 1018 (9th Cir. 1990)). Grass’s position, as 10 well as his regular access of Defendants’ records and knowledge of their document signing 11 practices, provides a sufficient foundation for his declaration. See id.; Grass Decl. ¶¶ 2, 4-8, 11- 12 14. Second, to the extent Munson asserts that Grass’s declaration is improper expert testimony, 13 Grass merely expresses facts based on his own personal knowledge and opinions rationally based 14 on that knowledge. See Gonzalez, 2026 WL 765325, at *3. Finally, Munson contends that the 15 agreements themselves are hearsay, but contracts are excluded from the definition of hearsay. See 16 Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 1145, 1154 (9th Cir. 2000). 17 C. Enforceability of Delegation Clauses 18 Each of the arbitration agreements contains a delegation clause. See Dkt. No. 16-3 ¶ 24.1- 19 24.2 (requiring arbitration of claims arising from “the negotiation, execution, interpretation, 20 performance, breach or enforcement of this [Consulting] Agreement” and providing the arbitrator 21 with “sole and exclusive authority to determine whether a dispute, claim or cause of action is 22 subject to arbitration . . . and to determine any procedural questions which grow out of such 23 disputes, claims or causes of action and bear on their final disposition”); Dkt. No. 16-4 at 4 (“The 24 Arbitrator, and not any federal or state court, shall have the exclusive authority to resolve any 25 issue relating to the interpretation, formation or enforceability of this Agreement, or any issue 26 relating to whether a Claim is subject to arbitration under this Agreement . . . .”); Dkt. No. 16-5 at 27 1 4 (same).2 Accordingly, so long as the delegation clauses are enforceable, the arbitrator must 2 resolve any remaining questions about enforceability of the agreements. See Caremark, 43 F.4th 3 at 1029. 4 A delegation clause is unenforceable if it is unconscionable. See, e.g., Holley-Gallegly v. 5 TA Operating, LLC, 74 F.4th 997, 1001 (9th Cir. 2023). While this analysis is not “confined to 6 the text of the delegation clause,” a party challenging provisions outside of the delegation clause 7 must “explain how those provisions make the fact of an arbitrator deciding arbitrability 8 unconscionable.” Id. at 1002 (citing Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 74 (2010)). 9 Under California law, unconscionability requires “both a procedural and a substantive element, the 10 former focusing on oppression or surprise due to unequal bargaining power, [and] the latter on 11 overly harsh or one-sided results.” Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 12 4th 83, 114 (2000) (quotations and citation omitted). The two elements are evaluated on a sliding 13 scale, so a stronger showing of one lessens the required showing of the other. Id. (citation 14 omitted). 15 1. Procedural Unconscionability 16 The delegation clauses have a moderate degree of procedural unconscionability. They 17 were included in contracts of adhesion, but “adhesion alone generally indicates only a low degree 18 of procedural unconscionability.” See Ramirez v. Charter Commc’ns, Inc., 16 Cal. 5th 478, 494 19 (2024). Nevertheless, “the potential for overreaching in the employment context warrants close 20 scrutiny of the contract’s terms.” Id. Additionally, Munson entered into two agreements on 21 September 20, 2022, and though both require arbitration of disputes, the two contain some 22 conflicting terms. For instance, as recounted above, the two agreements have different delegation 23 clauses and a different allocation of arbitration fees between the parties. It “would not be evident 24 to anyone without legal knowledge or access to the relevant authorities” how to reconcile the two 25 agreements. See OTO, L.L.C. v. Kho, 8 Cal. 5th 111, 129 (2019). 26 2 Munson has not raised whether the delegation clauses are “clear and unmistakable” about 27 delegating the question of enforceability to the arbitrator. See Rent-A-Center, 561 U.S. at 69 n.1. 1 Munson asserts that several circumstances demonstrate a high degree of procedural 2 unconscionability, see id. at 126-27, but none created extreme oppression or surprise. First, 3 Munson declared that Defendants never told him he would be giving up the right to a jury trial, 4 could negotiate the contracts, or could consult with an attorney. Dkt. No. 22-1 ¶¶ 4, 11. However, 5 Munson does not contend that Defendants “exerted pressure on him, denied him sufficient time to 6 consider the contract, or deprived him of the opportunity to review the contract with an attorney.” 7 See Peloquin v. Tesla, Inc., No. 25-CV-06690-AMO, 2026 WL 497169, at *4 (N.D. Cal. Feb. 23, 8 2026). Additionally, Munson notes that the final Dispute Resolution Agreement provided for 9 arbitration pursuant to the hyperlinked JAMS “Employment Arbitration Rules & Procedures then 10 in effect,” and those rules could subsequently change.3 See Dkt. No. 16-5 at 3. But “this appears 11 to be a common provision that does not render the agreement unconscionable.” See McKeown v. 12 SAS Retail Servs., LLC, No. 25-CV-03654-HSG, 2025 WL 3563717, at *4 (N.D. Cal. Dec. 12, 13 2025) (citing Kittrell v. USA Debusk LLC, No. 25-CV-02432-MMC, 2025 WL 3049883, at *8 14 (N.D. Cal. Oct. 31, 2025)). 15 2. Substantive Unconscionability 16 Substantive unconscionability focuses on whether an agreement has terms that are 17 “unreasonably favorable to the more powerful party.” Ramirez, 16 Cal. 5th at 494 (citation 18 omitted). Munson asserts several terms in the Consulting Agreement and the Dispute Resolution 19 Agreement are substantively unconscionable. 20 Starting with the Consulting Agreement, Munson first contends that it misclassified him as 21 an independent contractor, and that several non-arbitration provisions premised on his independent 22 contractor status are unconscionable as applied to employees. But this would not have an impact 23 on delegating arbitrability to the arbitrator, so it is not considered in analyzing unconscionability 24 of the delegation clause. See Holley-Gallegly, 74 F.4th at 1002. 25

26 3 Munson classifies this as an issue of substantive unconscionability, presumably following the court’s lead in Hasty v. Am. Auto. Assn., 98 Cal. App. 5th 1041, 1060-61 (2023). However, this 27 issue seems more aptly classified as one of procedural unconscionability. Cf. Fuentes v. Empire 1 Second, the Consulting Agreement requires Munson and Hungry Marketplace to “equally 2 share all arbitration fees.” Dkt. No. 16-3 ¶ 24.4. This provision impacts delegation of arbitrability 3 to the arbitrator. See Lim v. TForce Logistics, LLC, 8 F.4th 992, 1003 (9th Cir. 2021). It is 4 unconscionable to require an employee to “bear any type of expense that the employee would not 5 be required to bear if he or she were free to bring the action in court.” Armendariz, 24 Cal. 4th at 6 110-11. Armendariz’s requirements also apply to allegedly misclassified independent contractors. 7 Ali v. Daylight Transp., LLC, 59 Cal. App. 5th 462, 473 (2020). Accordingly, this provision is 8 unconscionable. See id. at 479. Defendants’ offer to waive it has no bearing on unconscionability. 9 See Armendariz, 24 Cal. 4th at 125. 10 Finally, Munson contends that the Consulting Agreement has conflicting provisions as to 11 whether disputes will be resolved by an arbitrator or by the courts. It first states that “[a]ny suit 12 involving this Agreement shall be brought in a court sitting in California.” Dkt. No. 16-3 ¶ 19. 13 But it later provides that for specific categories of disputes, “both Consultant and Client waive the 14 right to resolve any such disputes through a trial by jury or judge or through an administrative 15 proceeding” and must instead arbitrate those disputes. Id. ¶ 24.1 (all-caps removed). These terms 16 can be harmonized by interpreting paragraph 19 to require filing suit in a California court if 17 arbitration is not required (such as if a party seeks interim injunctive relief). See id. ¶¶ 19, 24.1, 18 24.5. So these provisions are not substantively unconscionable. 19 Turning to the final Dispute Resolution Agreement, Munson first contends that its 20 delegation of issues related to contract formation is unconscionable. While this provision would 21 seem to prevent a court from determining whether an agreement to arbitrate was formed, parties 22 cannot delegate that issue to an arbitrator. See Caremark, 43 F.4th at 1030. As a result, requiring 23 Munson to arbitrate formation is unenforceable. See id. 24 Next, the Dispute Resolution Agreement provides that “no certification authority or other 25 third party verification is necessary to validate your electronic signature and that the lack of such 26 certification or third party verification will not in any way affect the enforceability of your 27 electronic signature on the Agreement.” Dkt. No. 16-5 at 5. Munson contends that this provision 1 electronic signature can be shown in “any manner,” there is no obvious conflict between this 2 provision and California law. See Cal. Civ. Code § 1633.9(a). Thus, this provision does not 3 appear to be unconscionable. 4 Finally, Munson points to the Dispute Resolution Agreement’s third-party beneficiary 5 provision. Dkt. No. 16-5 at 4. However, this provision is not relevant to the analysis as it does not 6 impact delegating arbitrability to the arbitrator. See Holley-Gallegly, 74 F.4th at 1002. 7 3. Severability 8 “[C]ourts may liberally sever any unconscionable portion of a contract and enforce the rest 9 when: the illegality is collateral to the contract’s main purpose; it is possible to cure the illegality 10 by means of severance; and enforcing the balance of the contract would be in the interests of 11 justice.” Ramirez, 16 Cal. 5th at 517. Severance is appropriate to remedy the delegation clauses’ 12 unconscionable terms. First, the delegation clause in each agreement has only one unconscionable 13 provision, so neither clause is “‘permeated’ by unconscionability.” See Armendariz, 24 Cal. 4th at 14 122. Further, those problematic provisions can be easily severed from their respective agreements. 15 See Nguyen v. Applied Med. Res. Corp., 4 Cal. App. 5th 232, 255-56 (2016) (severing fee-splitting 16 provision). And each agreement contains a severability provision. See Dkt. No. 16-3 ¶ 20; Dkt. 17 No. 16-5 at 4. Accordingly, the Consulting Agreement’s fee-splitting provision and the Dispute 18 Resolution Agreement’s delegation of formation issues are both severed from their respective 19 agreements. 20 III. CONCLUSION 21 For the foregoing reasons, the Court GRANTS Defendants’ motion to compel arbitration 22 and motion to stay. The arbitrator must address any remaining arguments about arbitrability. 23 Given the procedural posture, the Court ORDERS that the instant case is CLOSED for statistical 24 purposes only. Nothing contained in this Order shall be construed as a dismissal or disposition of 25 the action, and should further proceedings become necessary herein, any party may initiate them in 26 the same manner as if the case had not been closed. The parties SHALL FILE a joint status 27 report on September 1, 2026, and every 90 days thereafter, to inform the Court of the status of the ] parties SHALL FILE a joint status report and advise whether the case should be terminated 2 and/or other actions which should be taken. 3 IT IS SO ORDERED. 4 Dated: June 3, 2026 oh Mal 6 ARACELI MARTINEZ-OLGUIN 7 United States District Judge 8 9 10 1] a 12

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