1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 LETICIA PINEDA, on behalf of herself No. 1:20-cv-00169-DAD-EPG and all others similarly situated, 12 Plaintiff, 13 ORDER DENYING DEFENDANT’S v. MOTION TO COMPEL INDIVIDUAL 14 ARBITRATION SUN VALLEY PACKING, L.P., 15 (Doc. Nos. 23, 32, 48, 50, 51, 53) Defendant. 16 17 This matter is before the court on the motion to compel individual arbitration filed by 18 defendant Sun Valley Packing, L.P., on June 4, 2020.1 (Doc. No. 23.) Pursuant to General Order 19 No. 617 addressing the public health emergency posed by the COVID-19 pandemic, the pending 20 motion was taken under submission on the papers. (Doc. No. 24.) For the reasons explained 21 below, the court will deny defendant’s motion to compel individual arbitration.
22 1 The undersigned apologizes for the excessive delay in the issuance of this order. This court’s 23 overwhelming caseload has been well publicized and the long-standing lack of judicial resources in this district long-ago reached crisis proportion. While that situation was partially addressed by 24 the U.S. Senate’s confirmation of a district judge for one of this court’s vacancies on December 17, 2021, another vacancy on this court with only six authorized district judge positions was 25 created on April 17, 2022. For over twenty-two months the undersigned was left presiding over approximately 1,300 civil cases and criminal matters involving 735 defendants. That situation 26 resulted in the court not being able to issue orders in submitted civil matters within an acceptable 27 period of time and continues even now as the undersigned works through the predictable backlog. This has been frustrating to the court, which fully realizes how incredibly frustrating it is to the 28 parties and their counsel. 1 BACKGROUND 2 Plaintiff Leticia Pineda, a seasonal agricultural worker, initiated this putative wage and 3 hour class action against defendant Sun Valley Packing, L.P., on October 23, 2019 in the Fresno 4 County Superior Court. (Doc. No. 1 at 3.) On December 27, 2019, plaintiff filed the operative 5 first amended complaint, in which she alleges claims under the California Labor Code, including 6 for failure to pay overtime wages, provide meal periods, pay timely wages upon cessation of 7 employment, and furnish accurate wage statements. (Doc. No. 1-1 at 3.) Plaintiff also asserts a 8 claim under California’s Unfair Competition Law, as well as a representative action claim for 9 civil penalties under the Labor Code Private Attorneys General Act of 2004 (“PAGA”). (Id.) 10 On January 31, 2020, defendant removed this action to this federal court, alleging that 11 diversity jurisdiction over this action exists under the Class Action Fairness Act of 2005 because 12 defendant employs an average of 1,000 employees in its agricultural packing plant as seasonal 13 workers during the packing season (approximately May through October annually), and several of 14 those workers are permanently domiciled in Mexico. (Doc. No. 1 at 2–6.) 15 On June 4, 2020, defendant filed the pending motion to compel arbitration of plaintiff’s 16 individual claims in this action based on two contractual agreements that plaintiff entered into 17 with defendant at the start of the 2019 and 2020 packing seasons. (Doc. No. 23-1 at 7.) 18 According to defendant, those agreements require the parties “to arbitrate on an individual basis 19 any and all disputes among them occurring at any time for any reason.” (Id.) Specifically, 20 defendant relies upon an arbitration provision in its 2019 Employee Handbook because plaintiff 21 signed an “Acknowledgement of Receipt” of that handbook on April 5, 2019 (“the 2019 22 Agreement”). (Id.) Defendant also relies upon an arbitration agreement in its 2020 “Letter 23 Employment Contract,” which plaintiff signed on April 24, 2020 (“the 2020 Agreement”). (Id.) 24 According to defendant, plaintiff agreed to arbitrate any disputes with her employer, including the 25 various wage, hour, and other labor-related claims alleged in this action, on an individual basis in 26 “binding arbitration before a neutral retired judge in accordance with the Federal Arbitration 27 Act,” and plaintiff also waived the right to pursue class actions and representative actions, such as 28 one under PAGA. (Id. at 7–10.) Thus, defendant requests that the court grant its motion to 1 compel arbitration of plaintiff’s individual claims, dismiss all of plaintiff’s class claims with 2 prejudice, and dismiss plaintiff’s putative PAGA collective claim without prejudice. (Id. at 29– 3 31.) 4 On June 23, 2020, plaintiff filed an opposition to the pending motion to compel 5 arbitration, arguing that neither the 2019 Agreement nor the 2020 Agreement are valid, 6 enforceable agreements to arbitrate plaintiff’s claims. (Doc. No. 25 at 10.) According to 7 plaintiff, both agreements are unconscionable (id. at 15–23), and defendant “Sun Valley Packing, 8 L.P.” is not a signatory to the 2020 Agreement nor mentioned at all in that agreement, which was 9 signed only by “Valle Del Sol, LLC” and plaintiff (id. at 24). 10 On June 30, 2020, defendant filed a reply to plaintiff’s opposition, in which defendant 11 concedes that certain provisions of the agreements are unconscionable and should be severed but 12 maintains that the agreements remain otherwise enforceable. (Doc. No. 26 at 16–18, 21–22.) 13 Defendant also contends that plaintiff is engaging in “pure gamesmanship” by arguing that the 14 2020 Agreement was somehow unrelated to her employment with defendant because plaintiff 15 filed a complaint with the Workers’ Compensation Appeals Board specifically alleging that she 16 suffered stress related injuries while working for defendant from May 28, 2019 to May 28, 2020. 17 (Id. at 18–19.) 18 LEGAL STANDARD 19 A written provision in any contract evidencing a transaction involving commerce to settle 20 a dispute by arbitration is subject to the Federal Arbitration Act (“FAA”). 9 U.S.C. § 2. The 21 FAA confers on the parties involved the right to obtain an order directing that arbitration proceed 22 in the manner provided for in a contract between them. 9 U.S.C. § 4. The FAA “leaves no place 23 for the exercise of discretion by a district court, but instead mandates that district courts shall 24 direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been 25 signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). In deciding a motion to 26 compel arbitration, the court “is limited to determining (1) whether a valid agreement to arbitrate 27 exists [within the contract] and, if it does, (2) whether the agreement encompasses the dispute at 28 issue.” Boardman v. Pac. Seafood Group, 822 F.3d 1011, 1017 (9th Cir. 2016) (citing Chiron 1 Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (brackets in original)). 2 There is an “emphatic federal policy in favor of arbitral dispute resolution.” Balen v. 3 Holland Am. Line Inc., 583 F.3d 647, 652 (9th Cir. 2009) (quoting Mitsubishi Motors Corp. v. 4 Soler Chrysler–Plymouth, 473 U.S. 614, 631 (1985)). As such, “any doubts concerning the scope 5 of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the 6 construction of the contract language itself or an allegation of waiver, delay, or a like defense to 7 arbitrability.” Mitsubishi Motors Corp., 473 U.S. at 626 (citation omitted). 8 Pursuant to the FAA, arbitration agreements “shall be valid, irrevocable, and enforceable, 9 save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. 10 § 2. An arbitration agreement may only “be invalidated by ‘generally applicable contract 11 defenses, such as fraud, duress, or unconscionability,’ but not by defenses that apply only to 12 arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” 13 AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (quoting Doctor’s Assocs., Inc. v. 14 Casarotto, 517 U.S. 681, 687 (1996)). “[C]ourts must place arbitration agreements on an equal 15 footing with other contracts.” Id. Accordingly, courts may not apply traditional contractual 16 defenses, like duress and unconscionability, in a broader or more stringent manner to invalidate 17 arbitration agreements and thereby undermine FAA’s purpose to “ensur[e] that private arbitration 18 agreements are enforced according to their terms.” Id. at 344 (quoting Volt Info. Scis., Inc. v. Bd. 19 of Trs., 489 U.S. 468, 478 (1989)). 20 “To determine whether the parties formed an agreement to arbitrate, courts ‘apply 21 ordinary state-law principles that govern the formation of contracts.’” Int’l Bhd. of Teamsters v. 22 NASA Servs., Inc., 957 F.3d 1038, 1042 (9th Cir. 2020) (quoting First Options of Chi., Inc. v. 23 Kaplan, 514 U.S. 938, 944 (1995)). “[U]nder California law, mutual assent is a required element 24 of contract formation.” Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014); 25 Donovan v. RRL Corp., 26 Cal. 4th 261, 270 (2001) (“An essential element of any contract is the 26 consent of the parties, or mutual assent.”). “Mutual assent may be manifested by written or 27 spoken words, or by conduct, and acceptance of contract terms may be implied through action or 28 inaction.” Knutson, 771 F. 3d at 565 (internal citations omitted). “Thus, ‘an offeree, knowing 1 that an offer has been made to him but not knowing all of its terms, may be held to have accepted, 2 by his conduct, whatever terms the offer contains.’” Id. (quoting Windsor Mills, Inc. v. Collins & 3 Aikman Corp., 25 Cal. App. 3d 987, 991 (1972)). “Courts must determine whether the outward 4 manifestations of consent would lead a reasonable person to believe the offeree has assented to 5 the agreement.” Id. However, “a signed agreement is not necessary to a valid arbitration 6 agreement, and a party’s acceptance may be implied.” Paxton v. Macy’s W. Stores, Inc., No. 7 1:18-cv-00132-LJO-SKO, 2018 WL 4297763, at *4 (E.D. Cal. Sept. 7, 2018). 8 Under California law, the party moving to compel arbitration bears the burden of proving 9 the existence of an arbitration agreement by a preponderance of the evidence. Knutson, 771 F. 3d 10 at 565. “[T]he party opposing arbitration bears the burden of proving any defense, such as 11 unconscionability.” Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1260 (9th Cir. 2017) (quoting 12 Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 236 (2012)). In 13 determining whether an agreement to arbitrate exists, “[t]he trial court sits as the trier of fact, 14 weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony 15 the court may receive at its discretion, to reach a final determination.” Ruiz v. Moss Bros. Auto 16 Grp., Inc., 232 Cal. App. 4th 836, 842 (2014) (citing Engalla v. Permanente Med. Grp., Inc., 15 17 Cal. 4th 951, 972 (1997), as modified (July 30, 1997)). 18 ANALYSIS 19 The court begins by analyzing whether defendant has shown by a preponderance of the 20 evidence that a valid agreement to arbitrate exists between itself and plaintiff. Because the court 21 finds that defendant has not done so, the court need not address the parties’ arguments regarding 22 whether the agreements are unconscionable or otherwise unenforceable.2 23 A. The 2020 Agreement 24 In support of its pending motion to compel arbitration, defendant has filed declarations 25 from Mr. Casey Jones, a partner in defendant Sun Valley Packing, L.P., (Doc. No. 23-2) and from 26
27 2 The court will also deny as moot plaintiff’s request for leave to file supplemental authority (Doc. No. 48), which pertains to her unconscionability arguments. Relatedly, the court will also 28 deny as moot plaintiff’s motion to strike defendant’s opposition thereto (Doc. No. 50). 1 Ms. Caroline Hurtado, a supervisor in defendant’s packinghouse, (Doc. Nos. 26-3, 29), which 2 attach as exhibits a copy of the “Letter Employment Contract” in the Spanish language that 3 plaintiff signed on April 24, 2020 (Doc. No. 29 at 16–21), as well as an unsigned, blank copy of 4 the English language version of the contract (Doc. No. 23-4).3 Defendant invokes the arbitration 5 provision appearing in paragraph 5 of this contract as the basis for compelling plaintiff to submit 6 her claims against it to binding arbitration. (Doc. No. 23-1 at 7, 9–10.) However, as plaintiff 7 points out in her opposition to defendant’s pending motion to compel arbitration, defendant is not 8 a signatory to the contract that plaintiff signed on April 24, 2020. (Doc. No. 25 at 23–25.) 9 In the English language version of the contract, the top of the first page has defendant’s 10 address block under the text “SUN VALLEY PACKING, L.P.” and the first sentence of the 11 contract reads as follows: “The purpose of this letter is to confirm the agreement between your 12 employer ‘Sun Valley Packing, LP., a California Limited Partnership’ (hereinafter referred to as 13 ‘Sun Valley’) and you.” (Doc. No. 23-4 at 2.) Consistent with that hereinafter reference 14 designation, the contract itself includes several references to “Sun Valley” throughout its 5 pages, 15 though the signature block at the end of the contract states defendant’s full name: “Sun Valley 16 Packing, L.P.” (Id. at 2–6.) 17 /////
18 3 On July 1, 2020, plaintiff filed objections to the Hurtado declaration because it bore an 19 electronic signature and did not include a statement that the declarant’s original signature was retained by counsel, as required by the Local Rules. (Doc. No. 27.) However, plaintiff’s 20 objections in this regard were rendered moot the next day when defendant filed an errata correction to provide the Hurtado declaration bearing the original signature page. (Doc. No. 29.) 21 Nevertheless, on July 7, 2020, plaintiff filed a motion to strike the Hurtado declaration because it contained “new” evidence that should have been submitted concurrently with defendant’s motion, 22 as opposed to being filed concurrently with defendant’s reply. (Doc. No. 32.) Defendant filed an 23 opposition to plaintiff’s motion to strike, arguing that the Hurtado declaration was in “direct response” to the declaration that plaintiff submitted with her opposition, i.e., the Hurtado 24 declaration rebuts several of the statements plaintiff made in her declaration and was therefore properly submitted with its reply. (Doc. Nos. 35 at 12–15; 36 at 7.) The court agrees. While a 25 court “may refuse to consider new evidence submitted for the first time in a reply if the evidence should have been presented with the opening brief,” Wallace v. Countrywide Home Loans, Inc., 26 No. 08-cv-1463-AG-MLG, 2009 WL 4349534, at *7 (C.D. Cal. Nov. 23, 2009), “[e]vidence 27 submitted in direct response to evidence raised in the opposition [] is not ‘new,’” In re ConAgra Foods, Inc., 302 F.R.D. 537, 559 n.87 (C.D. Cal. 2014). Accordingly, plaintiff’s motion to strike 28 the Hurtado declaration (Doc. No. 32) will be denied. 1 In the Spanish language version of the contract that plaintiff signed, the top of the first 2 page has defendant’s address block in English (e.g., the English word “Avenue” is used instead of 3 the Spanish word “Avenida”), but the name on the address block is “VALLE DEL SOL, LLC.” 4 (Doc. No. 29 at 16.) In addition, the first line of the contract states: “El propósito de este 5 documento es confirmar el aceurdo entre su empleador ‘Valle Del Sol, LLC, una sociedad de 6 responsabilidad limitada de California’ (en adelante ‘Valle Del Sol’) y usted.” (Id.) As plaintiff 7 represents and defendant does not dispute, that sentence translated into English states: “The 8 purpose of this document is to confirm the agreement between your employer ‘Valle Del Sol, 9 LLC, a California Limited Liability Company’ (hereinafter ‘Valle Del Sol’) and you.” (Doc. No. 10 25 at 24.) Consistent with that hereinafter designation, there are many references to “Valle Del 11 Sol” throughout the Spanish language version of the contract, though the signature block at the 12 end of the contract states that entity’s full name: “Valle Del Sol, LLC.” (Doc. No. 29 at 21.) 13 That is, the two signatories to the 2020 Agreement that plaintiff signed are plaintiff on the one 14 hand and Valle Del Sol, LLC on the other hand, not defendant Sun Valley Packing, L.P. (Id.) As 15 plaintiff correctly points out, “Sun Valley Packing, L.P. is not named anywhere in the 2020 16 Agreement that plaintiff signed,” and “‘Sun Valley Packing, L.P.’ is plainly not a direct 17 translation of ‘Valle Del Sol, LLC.’” (Doc. No. 25 at 24) (noting that the Spanish word for 18 “Packing” does not appear in the entity name “Valle Del Sol, LLC,” and that the LLC designation 19 means that the entity is a limited liability company—not a limited partnership, which is 20 designated by “L.P.”). 21 In its reply, defendant appears to chalk up this difference to nothing more than defendant’s 22 use of “letterhead” that reflected the Spanish translation of “Sun Valley” as “Valle Del Sol.” 23 (Doc. No. 26 at 19.) In doing so, defendant does not counter any of plaintiff’s points, including 24 that “Valle Del Sol, LLC” is not a translation of defendant’s name – “Sun Valley Packing, L.P.” 25 Moreover, defendant does not respond to plaintiff’s observation that defendant did not translate 26 its entity name “Sun Valley Packing L.P.” into Spanish for the Spanish language version of the 27 2019 Agreement (the employee handbook and acknowledgement of receipt that plaintiff signed), 28 but rather refers repeatedly to its name in English throughout those 2019 documents, not “Valle 1 Del Sol.” (Doc. No. 25 at 25.) This too strongly suggests that the signatory “Valle Del Sol, 2 LLC” in the 2020 Agreement was not simply a mistranslation of defendant’s name. 3 Even more concerning is the fact that in its reply brief, defendant appears to feign 4 ignorance as to whether there exists such an entity called “Valle Del Sol, LLC,” and indeed 5 affirmatively criticizes plaintiff for engaging in “gamesmanship” in asserting that she had 6 “contract[ed] with some unrelated third party for the 2020 season.” (Doc. No. 26 at 18–19.) Yet, 7 in the court’s view it is defendant that hides the ball. Not only does defendant know that Valle 8 Del Sol, LLC exists, but it was defendant’s owner/partner Mr. Jones who created it. (Doc. No. 29 9 at 9–10.) Specifically, Ms. Hurtado states in her declaration that she had explained to plaintiff 10 and the other employees during the 2020 orientation that Valle Del Sol, LLC “was a new entity 11 that Casey Jones had created to handle the payroll writing services for Sun Valley Packing,” 12 which is owned by the Casey Jones family, and “Valle Del Sol did the check writing as a matter 13 of convenience to the Jones family who have a lot of entities and a lot of payroll responsibilities.” 14 (Id.)4 15 Based on defendant’s own evidentiary submissions, the court concludes that defendant has 16 failed to establish that it was a signatory to the 2020 Agreement. Thus, defendant has not 17 satisfied its burden to show that the 2020 Agreement constitutes an agreement between itself and 18 plaintiff to arbitrate disputes. See City of Riverside v. Mitsubishi Heavy Indus., LTD, No. 13-cv- 19 1724-BEN-KSC, 2014 WL 1028835, at *3 (S.D. Cal. Mar. 14, 2014) (“California state law states 20 that one must generally be a party to an agreement to be bound by it or invoke it.”) (citing DMS 21 Servs., LLC v. Superior Ct., 205 Cal. App. 4th 1346, 1352 (2012)); see also Revitch v. DIRECTV, 22 LLC, 977 F.3d 713, 718 (9th Cir. 2020) (“Because it was not and is not now a party to the 23 wireless services agreement between Revitch and AT&T Mobility, DIRECTV may not invoke the 24 ///// 25
4 Rather than engage with any of plaintiff’s arguments regarding Valle Del Sol, LLC, or 26 acknowledge that entity’s existence, defendant merely asserts that “[i]f the ‘letterhead’ of the 27 2020 agreement saying ‘Valle Del Sol’ instead of ‘Sun Valley’ somehow renders the 2020 arbitration agreement inapplicable,” plaintiff should still be compelled to arbitrate under the 2019 28 Agreement. (Doc. No. 26 at 19.) 1 agreement to compel arbitration.”) (citing DMS Servs., 205 Cal. App. 4th at 1352).5 2 Accordingly, defendant’s motion to compel arbitration based upon the arbitration 3 provision appearing in the 2020 Agreement will be denied.6 4 B. The 2019 Agreement 5 Defendant also moves to compel arbitration of plaintiff’s claims based upon the “Dispute 6 Resolution” section of defendant’s 2019 employee handbook because plaintiff acknowledged 7 ///// 8 ///// 9 ///// 10
11 5 Although courts recognize “limited exceptions . . . allowing nonsignatories to an agreement containing an arbitration clause to compel arbitration of, or be compelled to arbitrate, a dispute 12 arising within the scope of that agreement,” DMS Servs., 205 Cal. App. 4th at 1353, defendant has made no attempt to argue—let alone show—that any such exception applies here. For 13 example, nonsignatories of a contract may nonetheless enforce its terms if they are third party beneficiaries of the contract. See Comer v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006). As 14 the party seeking to compel arbitration, defendant would bear the burden of putting forward 15 evidence affirmatively establishing its status as an intended third-party beneficiary of the agreement. See Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1291 (9th Cir. 2017) 16 (affirming the denial of defendant Samsung’s motion to compel arbitration “[b]ecause Samsung failed to carry its burden of proving the existence of a contract with Norcia to arbitrate” by 17 pointing “to any evidence in the record indicating that Norcia and Verizon Wireless intended the Customer Agreement to benefit Samsung” as a third-party beneficiary). Here, defendant has not 18 advanced any such argument nor put forth any evidence showing that it is entitled to compel 19 arbitration as a nonsignatory beneficiary of the 2020 Agreement between plaintiff and Valle Del Sol, LLC. 20 6 On September 17, 2021, plaintiff filed a request for leave to file supplemental authority to alert 21 the court of the recent decision in Chamber of Commerce of the United States v. Bonta, No. 20- 15291, 13 F.4th 766 (9th Cir. 2021), in which the Ninth Circuit held that California Labor Code 22 § 432.6—a statute prohibiting employers from requiring employees to waive their right to file and 23 pursue a civil action in court as a condition of employment—does not run afoul of the FAA. (Doc. No. 51). However, the Ninth Circuit emphasized in the decision that § 432.6(f) explicitly 24 states that “[n]othing in this section is intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act,” and therefore that statute “in no way 25 affects the validity and enforceability” of agreements, even if they include arbitration provisions as a condition of employment. Chamber of Com. of U.S. v. Bonta, 13 F.4th 766, 779 (9th Cir. 26 2021). Accordingly, although the court grants plaintiff’s request to file supplemental authority 27 (Doc. No. 51) and has considered defendant’s response thereto (Doc. No. 52), the court ultimately concludes that the Ninth Circuit decision in Chamber of Com. of U.S. has no bearing on the 28 analysis set forth in this order. 1 receiving that handbook by signing an “acknowledgment of receipt” form on April 5, 2019.7 2 (Doc. No. 23-1.) A copy of the 2019 employee handbook in the Spanish language (Doc. No. 23- 3 6) and in the English language (Doc. No. 23-7) are attached as exhibits to the Jones declaration. 4 A copy of the acknowledgment of receipt form that plaintiff signed on April 5, 2019, in the 5 Spanish language, is also attached as an exhibit to that declaration. (Doc. No. 23-5.) That form 6 has a check list of seven items, followed by a paragraph of four sentences, and a signature and 7 date line. (Id. at 2.) However, the court is not aware of what is stated on that acknowledgment of 8 receipt form because defendant has not provided the court with an English translation. Though, 9 relevant here, neither party has asserted that the acknowledgment of receipt form itself refers to 10 arbitration or dispute resolution. 11 According to her declaration, on April 5, 2019, Ms. Hurtado gave the Spanish version of 12 the 2019 employee handbook to plaintiff and asked her to sign the acknowledgment of receipt 13 form, which plaintiff did. (Doc. No. 29 at 6.) Mr. Hurtado declares further that “[a]s that 14 Acknowledgment of Receipt form indicates, [plaintiff] also signed a few other documents at that 15 time, such as the Job Application, her I-9 Forms about entitlement to legally work in this country, 16 and information about what to do in the event of an accident.” (Doc. No. 29 at 6.) The court is 17 unable to confirm Ms. Hurtado’s representation regarding what that form indicates because, as 18 noted above, defendant did not provide the court with a translation of that form. Nevertheless, 19 plaintiff does not controvert Ms. Hurtado’s representation that she signed the acknowledgment 20 form. In plaintiff’s declaration, she states that “[a]t the beginning of the season in April 2019, 21 defendant presented me with a stack of papers. I was required to sign a document stating that I 22 7 Section “O. Dispute Resolution” states as follows: 23 All disputes between employee and employer, whenever they arise, 24 shall be exclusively resolved on an individual basis (for example class actions are waived) by final and binding arbitration before a 25 neutral retired judge in accordance with the Federal Arbitration Act. 26 Any paycheck mistakes are waived by the employee if they are not reported to the Company’s Human Resource Department within ten 27 days of receipt of the paycheck. 28 (Doc. No. 23-7 at 31.) 1 received the papers.” (Doc. No. 25-2 at ¶ 4.) In addition, in summarizing relevant facts in her 2 opposition brief, plaintiff states that she “signed the form to acknowledge that she received 3 [seven] documents, including an employee handbook.” (Doc. No. 25 at 6, 11.) Thus, there 4 appears to be no dispute that plaintiff signed the form acknowledging her receipt of the 2019 5 employee handbook on April 5, 2019. 6 1. Whether Plaintiff Consented to the 2019 Agreement 7 Defendant argues that because plaintiff acknowledged her receipt of the 2019 handbook, 8 which contained an arbitration provision, and she thereafter continued working for defendant, her 9 continued employment establishes an “implied-in-fact agreement” to arbitrate regardless of 10 whether she actually read the employee handbook. (Doc. No. 23-1 at 13–14.) Plaintiff counters 11 that no such valid agreement to arbitrate exists because she did not manifest her consent to be 12 bound to arbitrate by signing the acknowledgment of receipt form, which did not mention 13 arbitration at all or even reference the two-sentence dispute resolution provision located on page 14 26 of the 66-page employee handbook. (Doc. No. 25 at 11–15.) 15 The court addresses the parties’ arguments and the legal authorities cited in support 16 thereof, in turn, below. 17 a. Implied Consent Based on Plaintiff’s Continued Employment 18 In support of its argument that plaintiff consented to the arbitration provision in the 2019 19 employee handbook by continuing her employment with defendant, defendant relies primarily on 20 this court’s decision in Martinez v. Vision Precision Holdings, LLC, No. 1:19-cv-01002-DAD- 21 JLT, 2019 WL 7290492, (E.D. Cal. Dec. 30, 2019), as well as a few California state court 22 decisions in cases involving arbitration provisions appearing in employee handbooks. (Doc. No. 23 23-1 at 12–15.) However, as plaintiff points out in her opposition (Doc. No 25 at 12 n.2), those 24 cases are all distinguishable because the documents signed by the employees in those cases 25 specifically referenced arbitration, whereas the acknowledgment of receipt form that plaintiff 26 signed in this case does not. 27 For instance, unlike the acknowledgment of receipt in this case, the document that the 28 employee signed in Martinez was itself an arbitration agreement, which clearly stated above the 1 signature line that “[b]y signing below, you agree to submit all disputes . . . for resolution by 2 binding arbitration,” and specified that “[a]s a condition of your employment . . . you and 3 [defendant] agree that certain claims arising out of or relating to your employment relationship 4 with [defendant] . . . must be submitted for resolution by final binding confidential arbitration.” 5 2019 WL 7290492, at *1; see also Quinn Decl., Ex. A, Martinez, No. 1:19-cv-01002-DAD-JLT, 6 Doc. No. 5-2 at 5, (E.D. Cal. Aug. 14, 2019). Thus, defendant’s reliance on the decision in 7 Martinez is unavailing. 8 The court also finds defendant’s reliance on the decision in Diaz v. Sohnen Enterprises, 34 9 Cal. App. 5th 126 (2019), to be misplaced because the parties in that case did not dispute that the 10 employee was notified that binding arbitration was a condition of employment and nevertheless 11 continued working. In Diaz, the court addressed whether binding arbitration can be a condition of 12 employment and concluded that “California law in this area is settled: when an employee 13 continues his or her employment after notification that an agreement to arbitration is a condition 14 of continued employment, that employee has impliedly consented to the arbitration agreement.” 15 34 Cal. App. 5th at 130. But the court in Diaz stressed that notification of that condition of 16 employment is critical for finding of such implied consent. The court emphasized that the parties 17 in that case did not dispute that the plaintiff was notified that her employer “was adopting a new 18 dispute resolution policy requiring arbitration of all claims,” that employees needed to sign the 19 arbitration agreement, and that “continued employment by an employee who refused to sign the 20 agreement would itself constitute acceptance of the dispute resolution agreement.” Id. at 128. 21 The parties in Diaz also did not dispute that when the plaintiff indicated that she did not wish to 22 sign the arbitration agreement, the employer’s chief operating officer and human resources 23 employee met with the plaintiff a second time to advise her again that “continuing to work 24 constituted acceptance of the agreement.” Id. Relying on those undisputed facts, the state 25 appellate court found that a binding agreement to arbitrate was formed by the plaintiff thereafter 26 continuing to work. Id. Importantly, the court distinguished a case in which an “employee 27 acknowledged receipt of an employee handbook containing an arbitration provision, but the 28 acknowledgement form did not reference or contain any agreement to comply with the arbitration 1 provision.” Id. at 130 (citing Mitri v. Arnel Mgmt. Co., 157 Cal. App. 4th 1164, 1173 (2007)). 2 As the court in Diaz explained, “[t]he general acknowledgment [in Mitri] stands in distinction to 3 the express explanation provided twice to Diaz: that continued employment would itself be a 4 manifestation of agreement to the arbitration provisions.” Id. at 130. In other words, the plaintiff 5 in Diaz indisputably had notice that agreement to arbitrate was a condition of employment, 6 whereas the plaintiff in Mitri was not provided such notice. 7 In contrast to Diaz and similar to Mitri, the parties here dispute whether plaintiff was 8 notified that agreeing to arbitrate was a condition of employment with defendant. In her 9 declaration, plaintiff states: “[n]o one told me that the employee handbook had an arbitration 10 clause or that by accepting employment at Sun Valley Packing, L.P., I was agreeing to arbitrate 11 any claims against the company.” (Doc. No. 25-2 at ¶ 4.) To rebut plaintiff’s statement, Ms. 12 Hurtado states in her declaration that during the 2019 orientation, she “specifically stated to 13 [plaintiff] and the group that signing the Acknowledgment of Receipt of the Handbook, which 14 contained the binding arbitration clause that I had talked about with them, was a condition of 15 employment” and “explained to them that simply going to work for the packinghouse was the 16 same thing as signing and agreeing in writing to binding arbitration.” (Doc. No. 29 at 7.) 17 Notably, the employee handbook itself does not state that agreeing to arbitrate disputes is a 18 condition of employment.8 Defendant’s position in this regard appears to be that the existence of 19 that condition was communicated to plaintiff and other employees orally during orientation. But 20 the handbook specifically states that “[n]one of these policies or procedures can be amended, 21 altered or modified in any way by oral statements” and “[t]his Handbook . . . takes precedence 22 over all memoranda or oral descriptions of the terms and conditions of employment.” (Doc. No. 23 23-7 at 6.) That is, defendant’s argument that an oral statement by Ms. Hurtado somehow 24 imposed a condition of employment is defeated by the very document that defendant relies upon: 25 its own employee handbook. For this reason, the court need not resolve the parties’ factual 26 8 For comparison, the “Conflicts of Interest” section of the handbook explicitly states that “[a]s a 27 condition of employment, no employee or any member of employee’s immediate family, without prior written consent of the authorized management, may have a financial interest in” a supplier, 28 customer, or competitor of Sun Valley. (See Doc. No. 23-7 at 39.) 1 dispute over whether or not Ms. Hurtado had, in fact, made those oral statements to plaintiff. In 2 any event, it is not evident—let alone undisputed—that agreeing to the arbitration provision in the 3 employee handbook was a condition of plaintiff’s employment with defendant and that plaintiff 4 was notified of that condition. As a result, defendant’s reliance on the decision in Diaz is 5 unavailing. Moreover, defendant does not acknowledge that the court in Diaz distinguished that 6 case from Mitri, a case that is actually more similar to this one. 7 Notably, in Mitri, the California Court of Appeal affirmed the trial court’s denial of an 8 employer’s motion to compel arbitration and rejected the employer’s argument that “the 9 acknowledgment receipt form signed by each plaintiff constitutes evidence of each plaintiff’s 10 acquiescence to the arbitration agreement provision in the employee handbook” because 11 “[c]onspicuously absent from the acknowledgment receipt form is any reference to 12 an agreement by the employee to abide by the employee handbook’s arbitration agreement 13 provision.” 157 Cal. App. 4th at 1173. Here, because defendant bears the burden to show that an 14 agreement exists, it is telling that defendant has neither provided a translation of the 15 acknowledgment form that plaintiff signed nor asserted that the acknowledgment form itself 16 refers to arbitration or dispute resolution. The court reasonably infers that, like the 17 acknowledgment form at issue in Mitri, any reference to the handbook’s arbitration provision is 18 “conspicuously absent” from the acknowledgment form that plaintiff signed. For that reason, the 19 other cases relied upon by defendant are similarly distinguishable from this one because the 20 handbook acknowledgement forms in those cases specifically notified the employee that there 21 was an agreement to arbitrate in the handbook.9
22 9 See 24 Hour Fitness, Inc. v. Superior Ct., 66 Cal. App. 4th 1199, 1215 (1998) (finding that an 23 arbitration agreement existed where there was no dispute that the “‘Certificate Of Acknowledgment Of Receipt & Reading The Personnel Handbook,’ [] explicitly refers to the 24 handbook’s section on arbitration”); see also Harris v. TAP Worldwide, LLC, 248 Cal. App. 4th 373, 377 (2016) (finding that an arbitration agreement existed because “the acknowledgement 25 form which plaintiff signed included acknowledging receiving both the Employee Handbook and the attached arbitration agreement,” and the handbook “states without equivocation that receipt 26 and agreement to the mandatory arbitration policy is ‘an absolute prerequisite’ to hiring and 27 continued employment” and that if “an applicant fails to execute the Agreement to Arbitrate yet begins employment, that employee will be deemed to have consented to the Agreement to 28 Arbitrate by virtue of receipt of this Handbook”); Aquino v. Toyota Motor Sales USA, Inc., No. 1 In her opposition to the pending motion to dismiss, plaintiff cites several cases in which 2 courts have found that handbook acknowledgments that do not specifically reference the 3 handbook’s arbitration provision are insufficient to establish enforceable agreements to arbitrate. 4 (Doc. No. 25 at 11–15.) These cases relied upon by plaintiff are on point and persuasive here. In 5 apparent agreement, defendant does not mention these cases in its reply brief or attempt to 6 distinguish them. 7 The court finds the decision in Esparza v. Sand & Sea, Inc., 2 Cal. App. 5th 781 (2016), 8 which in turn relied on the decision in Mitri, to be particularly persuasive in resolving the issue 9 presented. In Esparza, the plaintiff was given an employee handbook on her first day of work 10 and signed a form acknowledging that she received that handbook and was expected to read it 11 within one week. 2 Cal. App. 5th at 784–85. There was an “Agreement to Arbitrate” section in 12 that handbook, but the acknowledgement form itself “did not state that [plaintiff] agreed to abide 13 by the arbitration agreement within the handbook.” Id. at 784, 790. The California Court of 14 Appeal in Esparza rejected the defendant employer’s argument “that because [the plaintiff] was 15 expected to read the handbook within a week, and she continued to work [for defendant] after that 16 week, she must have impliedly agreed to the arbitration provision.” Id. at 790. In concluding that 17 the defendant had not satisfied its burden to show that an agreement to arbitrate existed, the court 18 emphasized that neither the acknowledgment form nor the employee handbook clearly stated that 19 agreeing to arbitrate was a condition of employment and/or that by commencing/continuing 20 employment, the employee would be deemed to have consented to that condition. Id. (noting that 21 “[a]bsent a clear agreement to submit disputes to arbitration, courts will not infer that the right to 22 a jury trial has been waived”) (citation omitted). As noted above, here too the acknowledgment 23 form plaintiff signed did not mention the arbitration provision and the handbook does not state 24 that agreeing to arbitrate is a condition of employment.
25 15-cv-05281-JST, 2016 WL 3055897, at *4 (N.D. Cal. May 31, 2016) (finding that an implied-in- fact agreement to arbitrate existed where the plaintiff “had notice of Toyota’s implementation of 26 the arbitration agreement, and she continued to work for Toyota after the Agreement went into 27 effect,” noting that Toyota’s written announcement “specifically stated: “[i]f you do not opt out, and you remain employed after November 10, 2013, you will have consented to the Mutual 28 Agreement to Arbitrate Claims’”). 1 Lending further support to its conclusion, the court in Esparza relied on another case, also 2 cited by plaintiff here, in which an employer’s motion to compel arbitration was denied because 3 the “acknowledgment form did not reference the arbitration clause, much less advise plaintiff that 4 he would be bound by it.” Sparks v. Vista Del Mar Child & Fam. Servs., 207 Cal. App. 4th 1511, 5 1522 (2012), abrogated on other grounds by Harris v. TAP Worldwide, LLC, 248 Cal. App. 4th 6 373 (2016). The California Court of Appeal in Sparks explained that: 7 [t]o support a conclusion that an employee has relinquished his or her right to assert an employment-related claim in court, there must 8 be more than a boilerplate arbitration clause buried in a lengthy employee handbook given to new employees. At a minimum, there 9 should be a specific reference to the duty to arbitrate employment- related disputes in the acknowledgment of receipt form signed by 10 the employee at commencement of employment. 11 Id. Here, as in Sparks, Esparza, and Mitri, there was no such reference to the arbitration 12 provision in the acknowledgment form that plaintiff signed, and there was no indication in the 13 handbook itself that by commencing and continuing employment, plaintiff was agreeing to be 14 bound to arbitrate disputes. 15 Accordingly, the court concludes that defendant has not shown that an implied-in-fact 16 agreement to arbitrate exists based upon plaintiff’s continued employment at defendant’s 17 packinghouse after acknowledging receipt of the employee handbook, which in turn contained an 18 arbitration provision. This conclusion is also supported by recent decisions in cases addressing 19 similar facts. See Mendoza v. Trans Valley Transp., 75 Cal. App. 5th 748, 791 (2022) 20 (“reject[ing] Employers’ contention that Mendoza entered into an implied-in-fact agreement to 21 arbitrate by simply receiving a copy of the Handbook and working for [employer]”)10; Cf. Mcunu 22 v. Trader Vic’s, No. 19-cv-07817-EMC, 2020 WL 12894939, at *5–6 (N.D. Cal. May 20, 2020) 23 (distinguishing the decisions in Esparza and Sparks and concluding that an arbitration agreement 24 existed where the acknowledgment of receipt form that the employee signed specifically called 25 out the arbitration agreement, which was in the handbook and explicitly stated that agreeing to 26 arbitrate was a condition of employment). 27 10 Plaintiff’s request for leave to file supplemental authority to bring to the court’s attention this 28 recent decision in Mendoza (Doc. No. 53) is granted. 1 b. Consent Based on Alleged Use of the Arbitration Provision 2 The court also rejects defendant’s unsupported and somewhat vague argument—asserted 3 for the first time in its reply brief—that plaintiff knew of the arbitration provision and impliedly 4 agreed to be bound by it because she allegedly “invoked the Employee Handbook’s dispute 5 resolution process,” on two separate occasions in 2019, “one regarding a claim involving sexual 6 harassment and another involving a physical altercation.” (Doc. No. 26 at 10.) Defendant does 7 not elaborate any further in its reply brief, but would apparently have the court believe that 8 plaintiff submitted a dispute to arbitration twice. Not so. Not even once. A close review of the 9 portions of the Hurtado declaration that defendant cites in advancing this argument plainly do not 10 support it or warrant such a misleading characterization. 11 In the first alleged incident, plaintiff complained to Ms. Hurtado (her supervisor) about a 12 fellow worker engaging in sexual harassment, and Ms. Hurtado served as a translator for a 13 meeting between plaintiff and Mr. Jones in his office, during which the dispute was settled. (Doc. 14 No. 29 at 8.) Though Ms. Hurtado characterizes this incident as “utiliz[ing] the arbitration 15 provision” and states that she mentioned to plaintiff it was common to meet with Mr. Jones “to 16 discuss the possibility of a settlement before the arbitrator is actually hired” (id.), what Ms. 17 Hurtado describes appears to be consistent with the “policy against harassment” section of the 18 employee handbook, not the arbitration provision (see Doc. No. 23-7 at 42). Specifically, the 19 “policy against harassment” section of the handbook—which does not mention arbitration at all— 20 instead provides in relevant part that an employee who believes they are the victim of any type of 21 harassment should report the incident to their supervisor or to Lex Swanson [in Human 22 Resources] or [CEO] Walter Jones,” and the company will investigate, and “the complainant will 23 be made whole, to the extent possible, for his or her losses.” (Doc. No. 23-7 at 42–44.) In 24 contrast, there is nothing in the arbitration provision to suggest that an employee is to first meet 25 with Mr. Jones to discuss settlement before engaging an arbitrator. 26 Similarly, in the second alleged incident, a different fellow employee complained to Ms. 27 Hurtado that plaintiff had pushed and shoved her, and Ms. Hurtado met with the complainant, 28 plaintiff, and Mr. Jones to settle the dispute. (Doc. No. 29 at 8–9.) In her declaration, Ms. 1 | Hurtado characterizes this incident as “[t]he second time I was involved with [plaintiff] in an 2 | arbitration claim,” and again asserts that what occurred was a “‘pre-arbitration settlement 3 | conference.” (/d. at 9.) Here too, however, what Ms. Hurtado has described instead aligns with 4 | defendant’s harassment policy, not the arbitration provision of the employee handbook. 5 || Accordingly, these characterizations do not suffice to support defendant’s assertion that plaintiff 6 | had twice utilized the arbitration provision of the handbook. 7 In sum, defendant has not shown that the 2019 Agreement constitutes a valid agreement to 8 | arbitrate between plaintiff and itself based upon plaintiff's continued employment after signing 9 | the acknowledgment of receipt of the employee handbook or plaintiffs alleged utilization of the 10 | arbitration provision to resolve two employment related disputes in 2019. 11 Accordingly, defendant’s motion to compel arbitration based upon the arbitration 12 || provision in the 2019 Agreement will also be denied. 13 CONCLUSION 14 For the reasons stated above: 15 1. Defendant’s motion to compel arbitration (Doc. No. 23) is denied; 16 2. Plaintiff's motion to strike the Hurtado declaration (Doc. No. 32) is denied; 17 3. Plaintiff's first request for leave to file supplemental authority (Doc. No. 48) and 18 plaintiff’s motion to strike defendant’s opposition thereto (Doc. No. 50) are denied 19 as having been rendered moot by this order; 20 4. Plaintiff's second request for leave to file supplemental authority (Doc. No. 51) is 21 granted; 22 5. Plaintiff's third request for leave to file supplemental authority (Doc. No. 53) is 23 granted; and 24 6. This matter is referred to the assigned magistrate judge for purposes of issuing a 25 scheduling order. 26 | IT IS SO ORDERED. me □ *7 | Dated: _May 23, 2022 Yel A Lange 28 UNITED STATES DISTRICT JUDGE 18