Rubio v. Aaron's LLC

• Court: District Court, E.D. California
• Decided: November 27, 2024
• Docket: 1:24-cv-00526
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 ANGEL RUBIO, on behalf of himself and No. 1:24-cv-00526-KES-BAM all others similarly situated, 12 Plaintiff, 13 ORDER GRANTING MOTION TO COMPEL v. ARBITRATION 14 AARON’S LLC, a Georgia limited liability Doc. 7 15 company; QUINTIN LAKE, an individual; and DOES 1 through 100, inclusive, 16 Defendants. 17

18 19 Defendant Aaron’s LLC (“Aaron’s”) motion to compel arbitration and to stay action, filed 20 on July 29, 2024 (Doc. 7), is before the Court. The motion is fully briefed. Doc. 13 (“Opp’n”), 21 Doc. 14 (“Reply”). For the reasons discussed below, the Court grants the motion. 22 I. FACTUAL AND PROCEDURAL BACKGROUND 23 Aaron’s leases and sells furniture, electronics, appliances, and computers throughout the 24 United States, including in California. Doc. 7-2, ¶ 3. Plaintiff Angel Rubio (“Rubio”) worked for 25 Aaron’s as a non-exempt hourly employee from July 2023 until he filed this class action lawsuit. 26 Doc. 1-1, ¶ 2; Doc. 13-1, ¶ 3. 27 A. Aaron’s Onboarding Process and the Arbitration Agreement 28 According to Aaron’s Human Resources Onboarding Operations Manager Marsha Brown, 1 who oversees the onboarding process, Aaron’s disseminates many of its employment agreements 2 and policies electronically to new employees. Brown Decl. (Doc. 7-2 at 2) ¶¶ 2–4. Aaron’s uses 3 an electronic system to confirm and track when applicants or employees electronically 4 acknowledge its policies and procedures. Id. ¶ 4. Aaron’s uses a system called Dayforce. Id. 5 When applying for a position with Aaron’s, a prospective employee must provide a personal 6 email address. Id. After Aaron’s hires an applicant, Aaron’s creates a username and initial 7 Dayforce password for the new hire and sends the new hire an email with this information along 8 with a link to a website. Id. ¶ 5. When the new hire clicks on the link, he or she is prompted to 9 enter the username and initial Dayforce password and then is prompted, and required, to create a 10 user-selected password. Id. New hires are not otherwise able to access the Dayforce system from 11 this website; they can access the Dayforce system only in an Aaron’s store from a store computer. 12 Id. New hires are not able to log into Dayforce at the store until they have created a user-selected 13 password using the process described above. Id. Aaron’s employees are prohibited from sharing 14 their account information and passwords or using the account information and passwords of other 15 employees. Id. ¶ 6 & Ex. A (Doc. 7-2 at 8–17). 16 New hires log into Dayforce from a store computer using their unique username and 17 password. Once in the Dayforce system, the employee clicks a link stating, “Getting Started.” Id. 18 ¶ 8 & Ex. B. The link opens a page with several tab headings, including a tab entitled “Your 19 Onboarding Forms.” Id. ¶ 8 & Ex. C. The employee clicks that tab to complete all the necessary 20 forms associated with starting the position. Id. ¶ 8. The onboarding forms include several boxes, 21 each stating “Please click here to complete your [Onboarding Form].” Id. ¶ 9 & Ex. D. The 22 employee must scroll down to review and complete each onboarding form listed on the page. Id. 23 ¶ 9. One of these forms is the Arbitration Agreement Acknowledgment. Id. 24 The Arbitration Agreement Acknowledgment page says, “Please read and acknowledge 25 with your esignature,” followed by a box that states “Start.” Ex. E. Once the employee clicks the 26 box, a new page appears with text stating:

27 By providing my e-signature below, I acknowledge that I have read, and that I knowingly and voluntarily sign, Aaron’s Agreement to 28 Arbitrate (“Arbitration Agreement” or “Agreement.”). I understand 1 that this Arbitration Agreement has already been agreed to by Aaron’s, Inc. I further understand that if I do not wish to be subject 2 to the terms of the Arbitration Agreement, I must opt out by notifying the Company in writing, using the Company’s designated 3 opt out form (i.e., the Aaron’s Arbitration Agreement Election Form) accessible through the above Aaron’s Arbitration Agreement 4 link, within thirty (30) days of the date on which the Company published this agreement to me electronically. 5 6 Brown Decl. ¶ 10 & Ex. F. As noted, new hires may opt out of the arbitration agreement within 7 30 days of receiving the agreement. See also id. ¶ 16 & Exs. F, H, J, L. 8 Below this text, there is a link to a PDF version of the agreement to arbitrate. Id. By 9 clicking on the link, the employee can view the full agreement to arbitrate and download or print 10 the agreement. Id. There is also a box to check to accept and acknowledge the agreement, a box 11 for entering the date, and a link to start the signing process for the agreement. Id. ¶¶10–11 & 12 Ex. F. When the employee checks the box to accept and acknowledge the agreement, a DocuSign 13 window appears stating “Please read the Electronic Record and Signature Disclosure,” and 14 providing a link to the disclosure. Id. ¶ 11. Beneath this disclosure link, there is another box to 15 check stating “I agree to use electronic records and signatures.” Id. & Ex. G. After checking the 16 box, the employee selects “Continue.” Id. 17 The employee is next prompted to “start” the signing process for the arbitration 18 agreement. Id. ¶ 12 & Ex. H. Once the employee clicks “start,” another window entitled “Adopt 19 Your Signature” appears, which contains a box auto populated with a cursive version of the 20 employee’s name and initials. Id. ¶ 12 & Ex. I. The employee can also draw or upload his or her 21 own signature. Id. Underneath the example signature are buttons labeled “Adopt and Sign” and 22 “Cancel.” Id. When the employee presses “Adopt and Sign,” DocuSign applies the employee’s 23 signature. Id. ¶ 13 & Ex. J. A button labeled “Finish” appears, and when the employee presses 24 “Finish,” DocuSign applies a unique electronic “Envelope ID” to the transaction. Id. ¶ 14 & 25 Ex. K. Dayforce saves copies of the employee’s acknowledgment, including the DocuSign 26 Envelope ID, to the Dayforce system. Id. 27 /// 28 1 On July 5, 2023, Rubio electronically signed the Arbitration Agreement 2 Acknowledgment. Id. ¶ 17 & Ex. M. He acknowledged that, by signing with his e-signature, he 3 had read, and was knowingly and voluntarily signing, Aaron’s arbitration agreement. Id. As 4 noted above, the acknowledgement also included Rubio’s agreement that, if he did not wish to be 5 subject to the arbitration agreement, he was required to “opt out by notifying the Company in 6 writing, using the Company’s designated opt out form (i.e., the Aaron’s Arbitration Agreement 7 Election Form) accessible through the above Aaron’s Arbitration Agreement link, within thirty 8 (30) days . . . .” Id. 9 The arbitration agreement also contained information concerning the opt out provision in 10 a separate bolded section, entitled “Right to Opt-Out,” that provided:

11 If you do not wish to be bound by the terms of this Agreement, you must opt out by notifying the Company in writing, using the 12 Company’s designated opt-out form. In order to opt out of the benefits of this Agreement, you must fully complete and submit 13 the opt-out form within thirty (30) days of the date on which the Company published this Agreement to you electronically (the 14 “Opt-Out Period”). 15 Id. ¶ 16 & Ex. L (Doc. 7-2 at 43). The opt-out section provides a clickable link to access the opt- 16 out form. Id. It further provides that “[t]o be effective, the opt-out form must be signed by you, 17 dated, it must contain all of the requested information in legible print, and it must be postmarked 18 and sent via traceable mail (e.g., trackable US Mail, FedEx, UPS, etc.) or delivered via hand 19 delivery within the Opt-Out period.” Id. The opt-out section also provides: “Should you timely 20 opt out as provided in this paragraph, you will not be subject to any adverse employment action 21 as a consequence of that decision and you may pursue available legal remedies without regard to 22 this Agreement.” Id. The arbitration agreement provides that an employee is bound by its terms 23 unless the employee timely opts out of the agreement. Id. at Ex. L (Doc. 7-2 at 43). The 24 agreement remained available on the Dayforce system for the employee to later review, 25 download, or print at any time. Id. ¶ 17. 26 /// 27 /// 28 1 B. Procedural Background 2 Rubio filed this action in the Fresno County Superior Court against defendants Aaron’s, 3 Quintin Lake, and Does 1 through 100 on February 23, 2024. See Doc. 1-1. Aaron’s removed 4 the action to this Court on May 2, 2024. Doc. 1. The complaint alleges various violations of the 5 Labor Code and Business & Professions Code: failure to pay overtime wages (Claim One); 6 failure to pay minimum wages (Claim Two); failure to provide meal periods (Claim Three); 7 failure to provide rest periods (Claim Four); waiting time penalties (Claim Five); wage statement 8 violations (Claim Six); failure to timely pay wages (Claim Seven); failure to indemnify (Claim 9 Eight); failure to pay interest on deposits (Claim Nine); violation of Labor Code § 227.3 (Claim 10 Ten); and unfair competition (Claim Eleven). Doc. 1-1, §§ 37–112. On July 29, 2024, Aaron’s 11 moved to compel arbitration and to stay the action pending the completion of arbitration. Doc. 7.1 12 II. LEGAL STANDARD 13 The Federal Arbitration Act (“FAA”) governs the enforcement of arbitration agreements. 14 9 U.S.C. § 2. “Section 2 of the statute makes arbitration agreements ‘valid, irrevocable, and 15 enforceable, save upon such grounds as exist at law or in equity for the revocation of any 16 contract.’” Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906, 1917 (2022) (quoting 9 17 U.S.C. § 2). “As [the Supreme Court has] interpreted it, this provision contains two clauses: An 18 enforcement mandate, which renders agreements to arbitrate enforceable as a matter of federal 19 law, and a saving clause, which permits invalidation of arbitration clauses on grounds applicable 20 to ‘any contract.’” Id. at 650 (citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339–340 21 (2011)). 22 A party seeking to enforce an arbitration agreement may petition the court for “an order 23 directing the parties to proceed to arbitration in accordance with the terms of the agreement.” 24 9 U.S.C. § 4. In ruling on a motion to compel arbitration, a court’s role is “limited to

25 1 Aaron’s also moves unopposed for judicial notice of the American Arbitration Association’s Employment Arbitration Rules and Employment/Workplace Fee Schedule. See Doc. 7-4. Rubio 26 does not challenge the authenticity of these documents. The Court takes judicial notice of these 27 documents, which are “not subject to reasonable dispute because [they] . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. 28 Evid. 201(b)(2). 1 determining: (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the 2 agreement encompasses the dispute at issue. Boardman v. Pac. Seafood Grp., 822 F.3d 1011, 3 1017 (9th Cir. 2016). The party seeking to compel arbitration bears the burden of proving the 4 existence of an agreement to arbitrate by a preponderance of the evidence. Knutson v. Sirius XM 5 Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014). 6 “In determining whether the parties have agreed to arbitrate a particular dispute, federal 7 courts apply state-law principles of contract formation.” Berman v. Freedom Fin. Network, LLC, 8 30 F.4th 849, 855 (9th Cir. 2022) (citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 9 (1995)). Parties may rely on contract law defenses to challenge an agreement to arbitrate. See 10 Concepcion, 563 U.S. at 339. “To require arbitration, [a plaintiff’s] factual allegations need only 11 ‘touch matters’ covered by the contract containing the arbitration clause and all doubts are to be 12 resolved in favor of arbitrability.” Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999) 13 (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 624 n.13 14 (1985)). If a valid arbitration agreement encompassing the dispute exists, arbitration is 15 mandatory. Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985). Under section 3 of the 16 FAA, a court, “upon being satisfied that the issue involved . . . is referable to arbitration under 17 such an agreement, shall on application of one of the parties stay the trial of the action until such 18 arbitration has been had in accordance with the terms of the agreement.” 9 U.S.C. § 3. 19 III. ANALYSIS 20 Aaron’s maintains that Rubio signed a valid agreement to arbitrate all disputes related to 21 his employment, and that the agreement mandates individual arbitration and forecloses lawsuits 22 by class action. Doc. 7-1 at 7. Rubio disputes that there is a valid arbitration agreement and 23 further asserts that any arbitration agreement is unenforceable because it is procedurally and 24 substantively unconscionable. Doc. 13 at 5–6. 25 A. Validity of the Arbitration Agreement 26 1. Entry into the Arbitration Agreement 27 The parties agree that California law governs the issue of the validity of the arbitration 28 agreement. See Docs 7, 13. Rubio contends that Aaron’s fails to adequately establish that the 1 parties entered into the arbitration agreement. Doc. 13 at 7. He argues that Aaron’s declarant, 2 Marsha Brown, does not have personal knowledge of Rubio’s alleged execution of the arbitration 3 agreement. Id. at 8. Rubio asserts in his declaration that (1) he does not recall ever being 4 presented with an arbitration agreement at the time of his hiring or at any other point; (2) he has 5 no recollection of signing any agreement to arbitrate claims arising out of his employment with 6 Aaron’s; (3) no one ever informed him about an arbitration agreement, asked him to sign it, or 7 explained what an arbitration agreement was; and (4) until his counsel explained it to him, he did 8 not know what arbitration was. Rubio Decl. (Doc. 13-1) ¶¶ 4–7. 9 Rubio’s arguments concerning whether he entered into the arbitration agreement are 10 unpersuasive. Aaron’s properly authenticated Rubio’s electronic signature on the arbitration 11 agreement and has shown by a preponderance of the evidence that Rubio entered into the 12 agreement. See Doc. 7-2. To authenticate evidence a party must “produce evidence sufficient to 13 support a finding that the item is what the proponent claims it is.” Fed. R. Evid. 901(a); 14 American Fed’n of Musicians of the U.S. v. Paramount Pictures Corp., 903 F.3d 968, 976 (9th 15 Cir. 2018). There are many methods of authenticating evidence under Federal Rule of Evidence 16 901(b), and the proponent’s burden has been characterized as “not high.” See Prostek v. Lincare 17 Inc., 662 F. Supp. 3d 1100, 1111 (E.D. Cal. Mar. 21, 2023) (discussing authentication of 18 arbitration agreement) (quotations and citations omitted). 19 Aaron’s has established through Brown’s declaration and its exhibits that Rubio signed 20 the arbitration agreement along with other onboarding documentation and that the arbitration 21 agreement contains Rubio’s electronic signature, dated July 5, 2023. See Doc. 7-2, Exs. M–N. 22 Brown’s declaration establishes her knowledge of the onboarding process, the documents 23 included in that process, and the procedures by which new employees of Aaron’s “complete, 24 review, and acknowledge” those documents. Id. ¶ 3. She describes the onboarding process in 25 detail, provides screenshots showing each step of the process, and provides the arbitration 26 agreement that Rubio electronically signed. Id. ¶ 17; Exs. M–N. Brown’s declaration sufficiently 27 authenticates the signed arbitration agreement for purposes of Federal Rule of Evidence 901(a). 28 Rubio argues that he did not agree to the arbitration agreement because he “does not 1 recall” signing it. Doc. 13 at 5. Rubio’s lack of recollection does not contradict the evidence that 2 he signed the agreement. Nor does it establish a lack of mutual consent to the arbitration 3 agreement. Under California law, a valid contract requires the “mutual consent of the parties,” 4 which is “generally achieved through the process of offer and acceptance.” DeLeon v. Verizon 5 Wireless, LLC, 143 Cal. Rptr. 3d 810, 821 (Cal. Ct. App. 2012) (internal citations omitted). An 6 offeree “may be held to have accepted, by his conduct, whatever terms the offer contains” so long 7 as there was a sufficient “outward manifestation or expression of assent.” Windsor Mills, Inc. v. 8 Collins & Aikman Corp., 101 Cal. Rptr. 347, 350 (Cal. Ct. App. 1972). These principles apply to 9 all contracts, including arbitration agreements. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 10 1175 (9th Cir. 2014) (internal quotation marks omitted). Whether there was mutual consent “is 11 determined under an objective standard applied to the outward manifestations or expressions of 12 the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed 13 intentions or understandings.” Id. 14 Brown’s declaration and attached exhibits establish the steps that Rubio, as a new hire, 15 followed through the online onboarding process, including Rubio’s specific acknowledgement of 16 and consent to the arbitration agreement. In this process, the arbitration agreement was separately 17 identified, and Rubio separately entered his electronic signature agreeing to it. The onboarding 18 steps also clearly identified the option, which Rubio did not exercise, to opt out of the arbitration 19 agreement. Rubio does not provide any evidence to the contrary, stating only that he does not 20 recall signing the agreement. 21 Rubio relies on Metter v. Uber Technologies, Inc., No. 16-cv-06652-RS, 2017 WL 22 1374579, * 4 (N.D. Cal. April 17, 2017) for the proposition that his lack of recollection of 23 entering into the arbitration agreement precludes a finding that the parties manifested an 24 agreement to arbitrate. Metter is distinguishable from the present case. In Metter, the plaintiff 25 provided a “credible and consistent” declaration establishing that a pop-up keypad on an 26 application physically obscured a critical alert intended to notify him of the terms of service. Id. 27 at *4. When the plaintiff in Metter completed the registration process through the pop-up keypad, 28 “the . . . app functionally prevented him from seeing the terms of service alert,” and he registered 1 “without inquiry notice . . . of the terms of service and without understanding that registering is a 2 manifestation of assent to those terms.” Id. at *3. 3 Unlike the plaintiff’s specific allegations in Metter, Rubio fails to identify any reason why 4 he did not or could not have seen the arbitration agreement. He claims not to recall signing the 5 agreement, but he does not deny that he electronically signed it. In contrast, the plaintiff in 6 Metter established that he had not seen the arbitration agreement. The Metter decision 7 distinguished the plaintiff’s situation in that case from other cases, like that of Rubio here, “where 8 [a] plaintiff conclusorily claimed he never saw the [arbitration agreement], but did not 9 affirmatively identify any particular reason he would not or could not have seen it.” Id. at *4; see 10 also Cordas v. Uber Technologies, Inc., 228 F. Supp. 3d 985, 990 (N.D. Cal. Jan. 5, 2017) 11 (finding plaintiff’s conclusory allegations regarding lack of notice of terms and conditions 12 contradicted by evidence showing he assented to arbitration agreement). 13 Accordingly, Aaron’s has established that Rubio entered into the arbitration agreement. 14 2. Unconscionability 15 Rubio contends that the arbitration agreement is unconscionable and should not be 16 enforced. “Under California law, ‘the party opposing arbitration bears the burden of proving any 17 defense, such as unconscionability.’” Bielski v. Coinbase, Inc., 87 F.4th 1003, 1013 (9th Cir. 18 2023) (quoting Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 19 236 (2012)). If a contract or clause was unconscionable at the time it was made, a court may 20 refuse to enforce the contract, enforce the remainder of the contract without the unconscionable 21 clause, or limit the application of any unconscionable clause to avoid an unconscionable result. 22 Cal. Civ. Code § 1670.5(a). Unconscionability has both procedural and substantive elements, 23 “the former focusing on oppression or surprise due to unequal bargaining power, the latter on 24 overly harsh or one-sided results.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 340 (2011) 25 (quoting Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 114 (2000)) 26 (internal quotation marks omitted). 27 Under California law, “unconscionability requires a substantial degree of unfairness 28 beyond a simple old-fashioned bad bargain.” Mohamed v. Uber Technologies, Inc., 848 F.3d 1 1201, 1210 (9th Cir. 2016) (cleaned up) (quoting Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 2 1244 (2016). Unconscionability “is concerned . . . with terms that are unreasonably favorable to 3 the more powerful party.” Bielski, 87 F.4th at 1013 (quoting Sanchez v. Valencia Holding Co., 4 LLC, 61 Cal. 4th 899, 911 (2015)). “[B]oth procedural and substantive unconscionability must be 5 present in order for an agreement to be unenforceable.” Mohamed, 848 F.3d at 1211 (citation 6 omitted); see also Kilgore v. KeyBank, Nat. Ass’n, 718 F.3d 1052, 1058 (9th Cir. 2013) (en banc) 7 (same). While both elements must be shown to establish the unconscionability defense, they need 8 not be present in the same degree—they are weighed on a sliding scale, which allows a lesser 9 finding of procedural unconscionability when there is significant substantive unconscionability 10 present, and vice versa. Armendariz, 24 Cal. 4th at 114. 11 a. Procedural Unconscionability 12 Rubio contends the arbitration agreement is procedurally unconscionable because it is a 13 contract of adhesion that was presented to employees on a take it or leave it basis with no 14 opportunity to negotiate the terms, he was not informed of any opt-out procedure and his failure 15 to opt out was therefore not an exercise of his independent choice or judgment, and the agreement 16 incorporated the American Arbitration Association’s Employment Arbitration Rules and 17 Mediation Procedures (“AAA Rules”) only by reference. See Doc. 13. Aaron’s disputes that the 18 arbitration agreement is procedurally unconscionable, relying primarily on the agreement’s opt- 19 out provision. See generally Docs. 7, 14. 20 “The threshold inquiry in California’s unconscionability analysis is ‘whether the 21 arbitration agreement is adhesive.’” Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1281 (9th Cir. 22 2006) (quoting Armendariz, 24 Cal. 4th at 113). A contract of adhesion is “a standardized 23 contract, imposed upon the subscribing party without an opportunity to negotiate the terms.” Id. 24 (citation omitted). “Arbitration contracts imposed as a condition of employment are typically 25 adhesive.” OTO, LLC v. Kho, 8 Cal. 5th 111, 126 (2019); see also Armendariz, 24 Cal. 4th at 115 26 (“[i]n the case of preemployment arbitration contracts, the economic pressure exerted by 27 employers on all but the most sought-after employees may be particularly acute, for the 28 arbitration agreement stands between the employee and necessary employment, and few 1 employees are in a position to refuse a job because of an arbitration agreement”). 2 However, as the Ninth Circuit has held, “an arbitration agreement is not adhesive if there 3 is an opportunity to opt out of it.” Mohamed, 848 F.3d at 1211 (citing Circuit City Stores, Inc. v. 4 Ahmed, 283 F.3d 1198, 1199 (9th Cir. 2002)); see also Kilgore, 718 F.3d at 1059. In Mohamed, 5 the Ninth Circuit reversed the district court’s denial of Uber’s motion to compel arbitration of a 6 former Uber driver’s claims, finding that Uber’s arbitration agreements were not adhesive 7 because the plaintiff had a meaningful opportunity to opt out of them, and that the challenged 8 terms of the agreements were therefore not procedurally unconscionable. Mohamed, 848 F.3d at 9 1211. The agreements in Mohamed, as here, provided the plaintiff with the option to opt out of 10 arbitration by delivering notice of an intent to opt out within 30 days of entering into the 11 agreement. Id. The opt out provision in one of the Uber agreements required drivers to opt out 12 either in person at Uber’s San Francisco offices or by overnight delivery service. Id. at 1210–11. 13 The Ninth Circuit held that this opt out procedure was not illusory. Id. at 1211. As the opt-out 14 provisions in the Uber agreements provided a meaningful choice to Uber drivers, the Court 15 concluded the agreements were neither adhesive nor procedurally unconscionable. Id. at 1211– 16 12. 17 Mohamed controls the outcome in this case. As in Mohamed, Rubio was clearly notified 18 of the option to opt out of Aaron’s arbitration agreement and the 30-day window in which to do 19 so. See Brown Decl. (Doc. 7-2), Exs. F, H, J, L. The opt out procedure mirrors the procedure 20 upheld in Mohamed: Rubio was similarly required to deliver the opt out form to Aaron’s by 21 overnight mail or by hand delivery within 30 days. Id. ¶ 16 & Ex. L. Rubio did not elect to opt 22 out. As in Mohamed, the arbitration agreement was not adhesive as it contained a meaningful opt 23 out option, and the agreement is not procedurally conscionable. See Mohamed, 848 F.3d at 1211. 24 Rubio argues that Gentry v. Superior Court, 42 Cal. 4th 443, 470 (2007), confirms that 25 preemployment arbitration agreements are adhesive and retain some procedural unconscionability 26 where, notwithstanding a valid opt-out provision, the failure to opt out was not an “authentic 27 choice.” But, as addressed above, Rubio had a meaningful opportunity to opt out and he did not 28 do so. To the extent Rubio argues that, notwithstanding the meaningful opt-out option, the 1 arbitration agreement is nonetheless adhesive and thus procedurally unconscionable, this 2 argument is foreclosed by Ninth Circuit precedent. See Kilgore, 718 F.3d at 1059 (arbitration 3 clause not procedurally unconscionable where there was a meaningful opt out option); Mohamed, 4 848 F.3d at 1211 (“an arbitration agreement is not adhesive if there is an opportunity to opt out of 5 it”); Circuit City Stores, 283 F.3d at 1199 (arbitration agreement was not contract of adhesion, 6 and not procedurally unconscionable, because there was an opportunity to opt out of it). 7 Rubio’s reliance on Swain v. LaserAway Medical Group, 270 Cal. Rptr. 3d 786 (Cal. Ct. 8 App. 2020), is also unpersuasive. In Swain, the opt-out policy was buried among other forms and 9 there was no explanation that the plaintiff had the right to opt out of the arbitration agreement. Id. 10 at 795–96. In contrast, here the arbitration agreement was not hidden; it was a freestanding five- 11 page document that Aaron’s provided to Rubio in PDF format during the onboarding process. 12 The arbitration agreement contained a bolded section setting out Rubio’s opt-out rights and the 13 30-day deadline to do so, with instructions on how to opt out and a clickable link to the opt-out 14 form. See Ex. L (Doc. 7-2 at 43). Contrary to Rubio’s assertions, Aaron’s onboarding process 15 adequately informed him of both the arbitration agreement and the opportunity to opt out. 16 Nor does the arbitration agreement’s incorporation by reference of the AAA Rules render 17 it unconscionable. The California Supreme Court has noted that the incorporation by reference of 18 the AAA Rules would warrant closer scrutiny if there were “terms that were ‘artfully hidden’ by 19 the simple expedient of incorporating them by reference rather than including them in or 20 attaching them to the arbitration agreement.” Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 21 1245-46 (2016). But Rubio does not make any such argument in this case. In Baltazar, the court 22 found that incorporation by reference of the AAA Rules did not add any procedural 23 unconscionability, where the plaintiff’s challenge to the arbitration agreement did not concern any 24 particular provision of the AAA Rules. Id. The Court noted that, in cases faulting the 25 incorporation by reference of the AAA Rules, “the plaintiff’s unconscionability claim depended 26 in some manner on the arbitration rules in question.” Id. at 1246. Here, as in Baltazar, Rubio 27 does not identify any concern with a particular provision in the AAA Rules; he alleges only a 28 general objection to the agreement’s incorporation of those rules by reference. The incorporation 1 | by reference of the AAA Rules, without more, does not amount to procedural unconscionability. 2 | Id. 3 As the arbitration agreement is not procedurally unconscionable, the Court need not 4 | address the issue of substantive unconscionability. See Mohamed, 848 F.3d at 1211 (finding that, 5 | where arbitration agreement is not procedurally unconscionable, court need not reach issue of 6 | substantive unconscionability). 7 | IV. CONCLUSION AND ORDER 8 Accordingly, for the reasons discussed: 9 1. Defendant’s motion to compel arbitration (Doc. 7) is granted; 10 2. This action is stayed pending arbitration proceedings; and 11 3. Within fourteen (14) days of the issuance of the arbitrator's decision, the parties 12 shall notify the court that arbitration proceedings have concluded. 13 14 15 | IT IS SO ORDERED. _ : 16 Dated: _ November 27, 2024 4A UNITED STATES DISTRICT JUDGE

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