7 8 UNITED STATES DISTRICT COURT 9 FOR THE SOUTHERN DISTRICT OF CALIFORNIA 10 JUSTIN M. SONICO, individually Case No. 19-cv-01842-BAS-LL 11 and on behalf of all other persons similarly situated, ORDER: 12 Plaintiff, (1) DENYING WITHOUT PREJUDICE 13 DEFENDANTS’ MOTION TO v. COMPEL ARBITRATION AND 14 STAY PROCEEDINGS CHARTER COMMUNICATIONS, [ECF No. 19]; 15 LLC, et al., AND 16 Defendants. (2) GRANTING LEAVE TO TAKE 17 LIMITED DISCOVERY 18 19 Plaintiff Justin M. Sonico (“Plaintiff”) filed the instant wage-and-hour class action in 20 state court on August 21, 2019. After removing the action to this Court, Defendants filed 21 a Motion to Compel Arbitration and Stay Proceedings (“Motion”). For the reasons stated 22 below, the Court DENIES WITHOUT PREJUDICE the Motion and GRANTS the 23 parties’ leave to conduct further discovery to aid the Court in the resolution of the Motion. 24 I. BACKGROUND 25 Plaintiff filed this putative class action in state court alleging violations of various 26 California wage-and-hour laws, which was then removed to this Court on September 25, 27 2019. (Notice of Removal, ECF No. 1; Compl., Ex A. to Notice of Removal, ECF No. 1- 28 2.) Defendants Charter Communications, LLC and Charter Communications, Inc. 1 (collectively, “Defendants” or “Charter”) subsequently filed the instant Motion alleging 2 that Plaintiff agreed to arbitrate the underlying claims when he was hired by Time Warner 3 Cable (“TWC”) in 2014, which later merged with Charter. (Mot. to Compel Arbitration 4 (“Mot.”), ECF No. 19; Mem. of P. & A. in supp. of Mot. (“Mem. of P. & A.”) at 1 n.1, ECF 5 No. 19-1.) Below, the Court summarizes the arbitration agreements central to this dispute 6 and both parties’ arguments regarding the Motion. 7 A. The JAMS Agreement 8 Defendants claim that Plaintiff signed an arbitration agreement as part of his 9 onboarding process with TWC in December 2016 that requires the claims in his class action 10 lawsuit to proceed to arbitration. (Mot. at 1.) As part of its hiring practices, TWC required 11 applicants for employment to complete an online “onboarding” process. (Decl. of Chance 12 Cassidy (“Cassidy Decl.”) ¶ 8, ECF No. 19-2.)1 This system required applicants to log into 13 TWC’s Onboarding System (“OBS”) using a unique login identification and a temporary 14 confidential access code available to only the applicant. (Id. ¶ 10.) 15 Once logged in, the applicant was asked to review various policies, including a 16 Mutual Agreement to Arbitrate (“JAMS Agreement”) which stated that 17 any and all claims, disputes, and/or controversies between you and TWC arising from or related to your employment with TWC shall be submitted 18 exclusively to and determined exclusively by binding arbitration before a single Judicial Arbitration and Mediations Services, Inc. (“JAMS”) arbitrator 19 under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). 20 (Id. ¶ 11; JAMS Agreement at 4, Ex. B to Cassidy Decl., ECF No. 19-3.) The JAMS 21 Agreement specifically applies to claims 22 (3) under any state law governing Charter’s obligation to provide meal, rest, or other breaks, (4) alleging that you were paid improperly or paid insufficient 23 wages, overtime, compensation, or that Charter failed to comply with any law relating to the payment of wages, (5) under any other state law related to your 24 employment with Charter[.] 25 (JAMS Agreement at 4.) It further included a waiver of all representative, collective, and 26 class actions, allowing employees to pursue claims against Charter only in their individual
27 1 Mr. Cassidy has been the Senior Director of Charter’s Human Resources Service Center since 2017, and states that he has personal knowledge of TWC’s personnel recordkeeping and all records maintained in 28 1 capacity. (Id. at 4–5.) It also explained why Charter utilized the JAMS agreement, 2 provided a link to the JAMS alternative dispute resolution website where the applicant 3 could review the JAMS arbitration rules, and allowed the applicant to download a PDF 4 copy of the agreement. (Cassidy Decl. ¶ 12; OBS Webpages at 7–8, Ex. C to Cassidy Decl., 5 ECF No. 19-3.) 6 Each applicant was then prompted to electronically acknowledge and accept the 7 terms of the Agreement. (Cassidy Decl. ¶ 13; OBS Webpages at 10.)2 The OBS 8 automatically recorded the date and time of each applicant’s acceptance of the Agreement’s 9 terms. (Cassidy Decl. ¶ 16.) 10 Plaintiff completed the onboarding process and accepted an online offer for 11 employment with TWC on December 24, 2014. (Id. ¶ 9.) Plaintiff thereafter accepted the 12 JAMS Agreement on December 28, 2014 at 6:45 p.m. using his unique login ID and 13 confidential access code. (Id. ¶ 17; Onboarding Status Details for Justin Sonico, Ex. A to 14 Cassidy Decl., ECF No. 19-3.) 15 B. The Solution Channel Agreement 16 In 2016, Charter acquired TWC. (Mem. of P. & A. at 1; Cassidy Decl. ¶ 2.) In 2017, 17 Charter launched Solution Channel, “an updated employment-based legal dispute 18 resolution program.” (Req. to Stip. to Arbitration (“Req.”) at 7, Ex. A to Decl. of Max 19 Fischer in supp. of Reply (“Fischer Decl.”) ¶ 4, ECF No. 27-2.) The Solution Channel 20 Program (“Program”) establishes equal employment opportunity policies and procedures 21 for reporting and resolving workplace issues. (Solution Channel Program Guidelines 22 (“Guidelines”), Ex. A to Decl. of Megan McDonough (“McDonough Decl.”), ECF No. 27- 23 5.) The Guidelines contain an enumerated list of “General Rules” stating that participation 24 in the Program was “a condition of working at Charter” and specifically providing the 25 following:
27 2 Mr. Cassidy attests that the webpages contained in Exhibit C “are identical to the OBS webpages in effect in December 2014, and are therefore identical to the webpages Plaintiff saw when he completed the 28 1 Upon implementation of Solution Channel, current employees will be provided a 30-day opt-out period. Those employees will be covered by 2 Solution Channel unless they opt out. Those employees covered by a collective bargaining agreement or other employment agreement are excluded 3 from Solution Channel unless expressly allowed under those agreements (although nothing in this document shall limit the applicability of any 4 arbitration or other dispute resolution provision contained in those agreements). 5 6 (Id. at 8, 13.) Current employees were enrolled in the Program unless they opted out. (Id. 7 at 13.) The Guidelines do not provide instructions about how to opt out or affirmatively 8 consent to participation in the program. 9 The Mutual Arbitration Agreement—referred to herein as the Solution Channel 10 Agreement (“SCA”)—is included as part of the Guidelines. Like the JAMS Agreement, it 11 requires that claims arising from employment disputes with Charter be submitted to 12 arbitration and bars claims from being brought in a representative, collective, or class 13 action. (SCA §§ B.1, D, Ex. A to McDonough Decl.)3 The SCA states that both the 14 employee and Charter “mutually agree” to these terms as a condition of employment. (Id. 15 § A.) The SCA also states that it constitutes “the complete agreement of the parties on the 16 subject of resolution of the covered disputes, and supersedes any prior or contemporaneous 17 oral or written understanding on this subject[.]” (Id. § P.) Finally, the SCA establishes that 18 it is effective “as of the date of [the employee’s] consent to participate in Solution Channel.” 19 (Id. § V.) The SCA has no place for an employee to sign or otherwise indicate his or her 20 mutual assent to its terms.
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7 8 UNITED STATES DISTRICT COURT 9 FOR THE SOUTHERN DISTRICT OF CALIFORNIA 10 JUSTIN M. SONICO, individually Case No. 19-cv-01842-BAS-LL 11 and on behalf of all other persons similarly situated, ORDER: 12 Plaintiff, (1) DENYING WITHOUT PREJUDICE 13 DEFENDANTS’ MOTION TO v. COMPEL ARBITRATION AND 14 STAY PROCEEDINGS CHARTER COMMUNICATIONS, [ECF No. 19]; 15 LLC, et al., AND 16 Defendants. (2) GRANTING LEAVE TO TAKE 17 LIMITED DISCOVERY 18 19 Plaintiff Justin M. Sonico (“Plaintiff”) filed the instant wage-and-hour class action in 20 state court on August 21, 2019. After removing the action to this Court, Defendants filed 21 a Motion to Compel Arbitration and Stay Proceedings (“Motion”). For the reasons stated 22 below, the Court DENIES WITHOUT PREJUDICE the Motion and GRANTS the 23 parties’ leave to conduct further discovery to aid the Court in the resolution of the Motion. 24 I. BACKGROUND 25 Plaintiff filed this putative class action in state court alleging violations of various 26 California wage-and-hour laws, which was then removed to this Court on September 25, 27 2019. (Notice of Removal, ECF No. 1; Compl., Ex A. to Notice of Removal, ECF No. 1- 28 2.) Defendants Charter Communications, LLC and Charter Communications, Inc. 1 (collectively, “Defendants” or “Charter”) subsequently filed the instant Motion alleging 2 that Plaintiff agreed to arbitrate the underlying claims when he was hired by Time Warner 3 Cable (“TWC”) in 2014, which later merged with Charter. (Mot. to Compel Arbitration 4 (“Mot.”), ECF No. 19; Mem. of P. & A. in supp. of Mot. (“Mem. of P. & A.”) at 1 n.1, ECF 5 No. 19-1.) Below, the Court summarizes the arbitration agreements central to this dispute 6 and both parties’ arguments regarding the Motion. 7 A. The JAMS Agreement 8 Defendants claim that Plaintiff signed an arbitration agreement as part of his 9 onboarding process with TWC in December 2016 that requires the claims in his class action 10 lawsuit to proceed to arbitration. (Mot. at 1.) As part of its hiring practices, TWC required 11 applicants for employment to complete an online “onboarding” process. (Decl. of Chance 12 Cassidy (“Cassidy Decl.”) ¶ 8, ECF No. 19-2.)1 This system required applicants to log into 13 TWC’s Onboarding System (“OBS”) using a unique login identification and a temporary 14 confidential access code available to only the applicant. (Id. ¶ 10.) 15 Once logged in, the applicant was asked to review various policies, including a 16 Mutual Agreement to Arbitrate (“JAMS Agreement”) which stated that 17 any and all claims, disputes, and/or controversies between you and TWC arising from or related to your employment with TWC shall be submitted 18 exclusively to and determined exclusively by binding arbitration before a single Judicial Arbitration and Mediations Services, Inc. (“JAMS”) arbitrator 19 under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). 20 (Id. ¶ 11; JAMS Agreement at 4, Ex. B to Cassidy Decl., ECF No. 19-3.) The JAMS 21 Agreement specifically applies to claims 22 (3) under any state law governing Charter’s obligation to provide meal, rest, or other breaks, (4) alleging that you were paid improperly or paid insufficient 23 wages, overtime, compensation, or that Charter failed to comply with any law relating to the payment of wages, (5) under any other state law related to your 24 employment with Charter[.] 25 (JAMS Agreement at 4.) It further included a waiver of all representative, collective, and 26 class actions, allowing employees to pursue claims against Charter only in their individual
27 1 Mr. Cassidy has been the Senior Director of Charter’s Human Resources Service Center since 2017, and states that he has personal knowledge of TWC’s personnel recordkeeping and all records maintained in 28 1 capacity. (Id. at 4–5.) It also explained why Charter utilized the JAMS agreement, 2 provided a link to the JAMS alternative dispute resolution website where the applicant 3 could review the JAMS arbitration rules, and allowed the applicant to download a PDF 4 copy of the agreement. (Cassidy Decl. ¶ 12; OBS Webpages at 7–8, Ex. C to Cassidy Decl., 5 ECF No. 19-3.) 6 Each applicant was then prompted to electronically acknowledge and accept the 7 terms of the Agreement. (Cassidy Decl. ¶ 13; OBS Webpages at 10.)2 The OBS 8 automatically recorded the date and time of each applicant’s acceptance of the Agreement’s 9 terms. (Cassidy Decl. ¶ 16.) 10 Plaintiff completed the onboarding process and accepted an online offer for 11 employment with TWC on December 24, 2014. (Id. ¶ 9.) Plaintiff thereafter accepted the 12 JAMS Agreement on December 28, 2014 at 6:45 p.m. using his unique login ID and 13 confidential access code. (Id. ¶ 17; Onboarding Status Details for Justin Sonico, Ex. A to 14 Cassidy Decl., ECF No. 19-3.) 15 B. The Solution Channel Agreement 16 In 2016, Charter acquired TWC. (Mem. of P. & A. at 1; Cassidy Decl. ¶ 2.) In 2017, 17 Charter launched Solution Channel, “an updated employment-based legal dispute 18 resolution program.” (Req. to Stip. to Arbitration (“Req.”) at 7, Ex. A to Decl. of Max 19 Fischer in supp. of Reply (“Fischer Decl.”) ¶ 4, ECF No. 27-2.) The Solution Channel 20 Program (“Program”) establishes equal employment opportunity policies and procedures 21 for reporting and resolving workplace issues. (Solution Channel Program Guidelines 22 (“Guidelines”), Ex. A to Decl. of Megan McDonough (“McDonough Decl.”), ECF No. 27- 23 5.) The Guidelines contain an enumerated list of “General Rules” stating that participation 24 in the Program was “a condition of working at Charter” and specifically providing the 25 following:
27 2 Mr. Cassidy attests that the webpages contained in Exhibit C “are identical to the OBS webpages in effect in December 2014, and are therefore identical to the webpages Plaintiff saw when he completed the 28 1 Upon implementation of Solution Channel, current employees will be provided a 30-day opt-out period. Those employees will be covered by 2 Solution Channel unless they opt out. Those employees covered by a collective bargaining agreement or other employment agreement are excluded 3 from Solution Channel unless expressly allowed under those agreements (although nothing in this document shall limit the applicability of any 4 arbitration or other dispute resolution provision contained in those agreements). 5 6 (Id. at 8, 13.) Current employees were enrolled in the Program unless they opted out. (Id. 7 at 13.) The Guidelines do not provide instructions about how to opt out or affirmatively 8 consent to participation in the program. 9 The Mutual Arbitration Agreement—referred to herein as the Solution Channel 10 Agreement (“SCA”)—is included as part of the Guidelines. Like the JAMS Agreement, it 11 requires that claims arising from employment disputes with Charter be submitted to 12 arbitration and bars claims from being brought in a representative, collective, or class 13 action. (SCA §§ B.1, D, Ex. A to McDonough Decl.)3 The SCA states that both the 14 employee and Charter “mutually agree” to these terms as a condition of employment. (Id. 15 § A.) The SCA also states that it constitutes “the complete agreement of the parties on the 16 subject of resolution of the covered disputes, and supersedes any prior or contemporaneous 17 oral or written understanding on this subject[.]” (Id. § P.) Finally, the SCA establishes that 18 it is effective “as of the date of [the employee’s] consent to participate in Solution Channel.” 19 (Id. § V.) The SCA has no place for an employee to sign or otherwise indicate his or her 20 mutual assent to its terms. 21 Defense counsel disclosed the existence of the SCA, and Plaintiff’s decision to opt 22 out of the same, during the Early Neutral Evaluation Conference (“ENE”) before Magistrate 23 3 The SCA also states that parties bound to the agreement also mutually agree to submit to arbitration “all 24 disputes related to the arbitrability of any claim or controversy.” (Id. § B.3.) “[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or 25 whether their agreement covers a particular controversy.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69 (2010). “However, courts should not assume that the parties agreed to arbitrate arbitrability unless 26 there is “clea[r] and unmistakabl[e]” evidence that they did so.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 939 (1995). Because, as explained below, there is no clear and unmistakable evidence that 27 the parties agreed to the SCA in this case—indeed, both parties maintain that Plaintiff opted out—the Court does not find that the parties are bound to present the arbitrability questions in this Motion to the 28 1 Judge Lopez on October 31, 2019. (Pl.’s Opp’n to Defs.’ Mot. (“Opp’n”) at 4, ECF No. 2 26.) Defendants produced a general copy of the SCA, but no contract specific to Plaintiff 3 or documents reflecting his decision to opt out. (Id.) 4 C. Parties’ Arguments 5 Defendants move to compel arbitration on the basis that Plaintiff entered into a valid, 6 enforceable arbitration agreement when he accepted the JAMS Agreement during his 7 onboarding process with TWC, and that the instant claims fall squarely within the scope of 8 the Agreement. (See Mem. of P. & A. at 3–4.) Defendants have maintained that “Plaintiff 9 never entered into and is not bound by” the SCA because he opted out of it in 2017, leaving 10 the JAMS Agreement in effect and Plaintiff bound to its terms. (Reply in supp. of Mot. 11 (“Reply”) at 3‒4, ECF No. 27.) 12 Plaintiff argues that the Court cannot resolve the Motion without ordering Defendants 13 to produce Plaintiff’s specific SCA, because “[i]f a subsequent arbitration agreement was 14 in effect and opted out of by Plaintiff, the JAMS Arbitration would then be inoperative in 15 this instance as it would have been superseded.” (Opp’n at 6–8.) Plaintiff also argues that 16 Defendants have waived their right to arbitration by engaging in “acts wholly inconsistent 17 with the right to arbitrate” which have prejudiced Plaintiff. (Opp’n at 8.) Lastly, Plaintiff 18 contends that even if the JAMS Agreement controls, the Motion should be denied because 19 the JAMS Agreement is procedurally and substantively unconscionable. (Id. at 9–14.) 20 II. LEGAL STANDARD 21 The Federal Arbitration Act (“FAA”) applies to contracts involving interstate 22 commerce. 9 U.S.C. §§ 1, 2. The FAA provides that contractual arbitration agreements 23 “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in 24 equity for the revocation of any contract.” Id. § 2. The primary purpose of the FAA is to 25 ensure that “private agreements to arbitrate are enforced according to their terms.” Volt 26 Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). 27 Therefore, “as a matter of federal law, any doubts concerning the scope of arbitrable issues 28 1 should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. 2 Corp., 460 U.S. 1, 24–25 (1983). 3 Given this strong federal preference for arbitration and the contractual nature of 4 arbitration agreements, “a district court has little discretion to deny an arbitration motion” 5 once it determines that a claim is covered by a written and enforceable arbitration 6 agreement. Republic of Nicar. v. Standard Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991). 7 “In determining whether to compel a party to arbitration, a district court may not review 8 the merits of the dispute[.]” Esquer v. Educ. Mgmt. Corp., — F. Supp. 3d —, 2017 WL 9 5194635, at *2 (S.D. Cal. Nov. 9, 2017). 10 However, “question[s] of arbitrability” include “certain gateway matters” that are 11 “presumptively for courts to decide[.]” Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064, 12 2068 n.2 (2013); see also Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011) (identifying 13 “gateway questions of arbitrability” to include “whether the parties have a valid arbitration 14 agreement or are bound by a given arbitration clause, and whether an arbitration clause in 15 a concededly binding contract applies to a given controversy”); Mohamed v. Uber Techs., 16 Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) (“[T]here is a presumption that courts will decide 17 which issues are arbitrable; the federal policy in favor of arbitration does not extend to 18 deciding questions of arbitrability.”). Thus, a district court must determine (1) whether a 19 valid arbitration agreement exists and, if so, (2) whether the agreement covers the relevant 20 dispute. See 9 U.S.C. § 4; Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) 21 (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). 22 III. ANALYSIS 23 For the reasons stated below, the Court first finds that Defendants’ actions thus far 24 in the litigation have not waived their right to arbitration. Then, turning to the question of 25 which arbitration agreement, if any, controls in this case, the Court determines that further 26 discovery is necessary to decide the question. 27 28 1 A. Waiver 2 The Court first addresses Plaintiff’s argument that Defendants, by their actions, have 3 waived their right to arbitration. Plaintiff contends Defendants have acted inconsistently 4 with their right to arbitrate and prejudiced Plaintiff by: (1) moving to compel arbitration 5 “months after” Plaintiff filed the action in state court; (2) “actively selecting this venue” by 6 removing the case to federal court; (3) participating in the ENE and discussing settlement; 7 and (4) engaging in discovery by submitting proposed protective orders and participating 8 in the Belaire-West process. (Opp’n at 8–9.) 9 A party seeking to prove that the right to compel arbitration has been waived must 10 demonstrate: “(1) knowledge of an existing right to compel arbitration; (2) intentional acts 11 inconsistent with that existing right; and (3) prejudice to the person opposing arbitration 12 from such inconsistent acts.” Newirth by & through Newirth v. Aegis Senior Communities, 13 LLC, 931 F.3d 935, 940 (9th Cir. 2019) (citing Fisher v. A.G. Becker Paribas Inc., 791 F.2d 14 691, 694 (9th Cir. 1986)). Because waiver of a contractual right to arbitration is not 15 favored, “any party arguing waiver of arbitration bears a heavy burden of proof.” Fisher, 16 791 F.2d at 694. 17 “There is no concrete test to determine whether a party has engaged in acts that are 18 inconsistent with its right to arbitrate[.]” Martin v. Yasuda, 829 F.3d 1118, 1125 (9th Cir. 19 2016). Instead, courts consider whether the totality of the parties’ actions “indicate a 20 conscious decision . . . to seek judicial judgment on the merits of [the] arbitrable claims, 21 which would be inconsistent with a right to arbitrate.” Id. In other words, “a party acts 22 inconsistently with exercising the right to arbitrate when it (1) makes an intentional decision 23 not to move to compel arbitration and (2) actively litigates the merits of a case for a 24 prolonged period of time in order to take advantage of being in court.” Newirth, 931 F.3d 25 935 at 941. Further, prejudice results only “[w]hen a party has expended considerable time 26 and money due to the opposing party’s failure to timely move for arbitration and is then 27 deprived of the benefits for which it has paid by a belated motion to compel[.]” Martin, 28 829 F.3d at 1127. 1 Here, Defendants moved to compel arbitration exactly three months after Plaintiff 2 commenced this action in state court, and one month after Plaintiff refused to submit to 3 arbitration. (See Compl.; Mot.) This delay does not support a finding of waiver. See also 4 Chartwell Staffing Servs. Inc. v. Atl. Sols. Grp. Inc., No. 8:19-CV-00642-JLS-JDE, 2020 5 WL 620294, at *9 (C.D. Cal. Jan. 9, 2020) (finding a three-month delay in filing a motion 6 to compel arbitration “wholly insufficient to support a finding of waiver” and noting that 7 when finding waiver, “the Ninth Circuit identified delays ranging from nine to eighteen 8 months”) (citing Kelly v. Pub. Util. Dist. No. 2 of Grant Cty., 552 F. App’x 663, 664 (9th 9 Cir. 2014)).4 Moreover, in the three months that elapsed between the filing of the case and 10 Defendants’ Motion, the parties submitted a four-page Rule 26(f) Report (ECF No. 12) and 11 a protective order that Defendants clearly stated was contingent on “the outcome of 12 Defendant[s’] forthcoming motion to compel arbitration[.]” (ECF No. 17 at 2.) 13 Defendants’ conduct therefore evinces no “conscious decision” to litigate arbitrable claims 14 in federal court, nor has any significant amount of time and money has been expended on 15 substantive motions such that Plaintiff has been prejudiced.5 Van Ness Townhouses, 862 16 F.2d at 759; see also Kelly, 552 F. App’x at 664; Martin, 829 F.3d at 1127. 17 In any event, much of Defendants’ actions cited by Plaintiff appear to be responsive 18 to court orders. Defendants attempted to continue the Early Neutral Evaluation (ENE) 19 specifically because the parties were engaged in an ongoing meet-and-confer about 20 arbitration, but the request was denied, necessitating their appearance and meaningful 21 participation at the conference. (ECF Nos. 10, 11.) Further, after the ENE, the Magistrate 22 Judge Lopez set a deadline of November 20, 2019 for the parties to file the joint motion for 23 a protective order; Defendants filed their Motion to Compel Arbitration the next day. (ECF 24 Nos. 17, 19.) The Court does not find such actions, taken to comply with court orders 25 standard in the preliminary stages of a case, sufficient for waiver.
26 4 See Martin, 829 F.3d at 1126 (17 months); Van Ness Townhouses v. Mar Indus. Corp., 862 F.2d 754, 759 (9th Cir. 1988) (two years); Plows v. Rockwell Collins, Inc., 812 F. Supp. 2d 1063, 1068 (C.D. Cal. 27 2011) (13 months). 5 Moreover, Plaintiff has himself confirmed that Defendants have refrained from engaging in discovery, 28 1 Lastly, “where the defendant has not engaged in protracted litigation or obtained 2 discovery,” a defendant’s decision to remove an action to federal court has generally not 3 been considered inconsistent with the right to arbitrate and does not prejudice the opposing 4 party. Moffett v. Recording Radio Film Connection, Inc., No. CV 19-3319 PSG (KSx), 5 2019 WL 6898955, at *6 (C.D. Cal. Oct. 4, 2019) (quoting DeMartini v. Johns, No. 3:12- 6 CV-03929-JCS, 2012 WL 4808448, at *5 (N.D. Cal. Oct. 9, 2012)). This is particularly 7 true in cases where a defendant removed an action pursuant to CAFA. See Morvant v. P.F. 8 Chang’s China Bistro, Inc., 870 F. Supp. 2d 831, 846 (N.D. Cal. 2012) (“Plaintiffs argue 9 that removal pursuant to CAFA is logically irreconcilable with the intent to arbitrate based 10 upon an erroneous assumption that such removal amounts to an admission that this action 11 is suitable to class treatment . . . [r]emoval does not serve as an admission of those 12 allegations”); see also Armstrong v. Michaels Stores, Inc., No. 17-CV-06540-LHK, 2018 13 WL 6505997, at *10 (N.D. Cal. Dec. 11, 2018) (finding removal under CAFA cannot 14 constitute waiver because such class actions are “subject to the original jurisdiction” of 15 federal courts and thus “can only be heard in federal court”). 16 Considering the totality of Defendants’ actions, the Court does not conclude that 17 Defendants have acted inconsistently with their right to arbitrate or otherwise taken 18 advantage of litigating their claims in court, resulting in any prejudice to Plaintiff. 19 Accordingly, the Court finds Defendants have not waived their right to arbitration. 20 B. Controlling Agreement 21 Having addressed waiver, the Court now turns to the merits of the Motion. The key 22 issue is whether Plaintiff’s purported opt-out decision renders the JAMS Agreement—on 23 which Defendants’ Motion is based—inoperable, or whether the opt-out decision revives 24 it. Defendants’ position is that because Plaintiff opted out of the SCA without entering into 25 it, the SCA does not supersede the JAMS Agreement. (Reply at 3.) Plaintiff, however, 26 claims that the parties did, in fact “enter[] into a subsequent arbitration agreement” that 27 supersedes the JAMS Agreement. (Opp’n at 7.) 28 1 To determine whether the parties agreed to the SCA, the Court must apply “ordinary 2 state-law principles that govern the formation of contracts.” Norcia v. Samsung 3 Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (internal quotations omitted). 4 “Contract formation requires mutual consent, which cannot exist unless the parties ‘agree 5 on the same thing in the same sense.’” Rockridge Tr. v. Wells Fargo, N.A., 985 F. Supp. 6 2d 1110, 1142 (N.D. Cal. 2013) (quoting Bustamante v. Intuit, Inc., 141 Cal. App. 4th 199, 7 208 (2006)). “Mutual assent may be manifested by written or spoken words, or by 8 conduct.” Binder v. Aetna Life Ins. Co., 75 Cal. App. 4th 832, 844 (1999). 9 Here, however, Plaintiff provides no evidence to support that Plaintiff agreed to the 10 SCA and subsequently opted out, and Defendants provide no evidence that Plaintiff opted 11 out without agreeing to the SCA. See Arredondo v. Sw. & Pac. Specialty Fin., Inc., No. 12 1:18-cv-01737-DAD-SKO, 2019 WL 4596776, at *6 (E.D. Cal. Sept. 23, 2019) (citing 13 plaintiff’s declaration and written opt-out to support finding that she signed a dispute 14 resolution agreement before she opted out). Instead, Plaintiff claims Defendants’ 15 outstanding answers to discovery “confirm[] the existence that Plaintiff has opted out of 16 the subsequent arbitration agreement rendering the 2014 JAMS agreement inoperable” and 17 therefore requests that the Court order Defendants to respond to arbitration-related 18 discovery propounded by Plaintiff. (Opp’n at 7.) 19 The FAA provides for discovery in connection with a motion to compel arbitration 20 only if “‘the making of the arbitration agreement . . . be in issue.’” Simula, Inc. v. Autoliv, 21 Inc., 175 F.3d 716, 726 (9th Cir. 1999) (citing Prima Paint Corp. v. Flood & Conklin Mfg. 22 Co., 388 U.S. 395, 403–04 (1967)). At minimum, this includes the arbitration provisions 23 themselves. See Meyer v. T-Mobile USA Inc., 836 F. Supp. 2d 994, 1007 (N.D. Cal. 2011) 24 (denying request for arbitration-related discovery where contracts containing the arbitration 25 provisions at issue were already available to the parties and the court); Laguna v. Coverall 26 N. Am., Inc., No. 09CV2131-JM BGS, 2011 WL 3176469, at *8 (S.D. Cal. July 26, 2011) 27 (denying request for arbitration-related discovery where defendants “produced the 28 arbitration clauses for each named Plaintiff that is currently subject to a motion to compel 1 arbitration’). This also includes a party’s decision to opt out of an arbitration agreement 2 Erwin y. Citibank, N.A., No. 3:16-CV-03040-GPC-KSC, 2017 WL 1047575, at *4 3 11(S.D. Cal. Mar. 20, 2017) (“[W]hether or not Plaintiff opted out of the 2015 Arbitratior 4 || Agreement is dispositive of the first gateway question of arbitrability—it goes to the very 5 ||heart of whether an agreement to arbitrate exists.’’). 6 Here, determinations about Plaintiff’s entry into the SCA and his decision to opt ou 7 the SCA are dispositive of Defendants’ Motion. However, neither the SCA nor evidence 8 ||of an opt-out specific to the named Plaintiff is before the Court. Thus, the Court finds 9 || Plaintiff's request for discovery appropriate and orders the parties to conduct discovery 10 || pertaining only to the specific SCA between Plaintiff and Defendant, should it exist, and tc 11 || Plaintiff's decision to opt out of the SCA. Defendants’ participation in this discovery wil. 12 ||not be construed as a waiver of their right to arbitrate. 13 || IV. CONCLUSION 14 For the foregoing reasons, the Court DENIES WITHOUT PREJUDICE 15 || Defendants’ Motion to Compel Arbitration and Stay Proceedings (ECF No. 19) and 16 || GRANTS the parties until May 20, 2020 to take limited discovery related to the SCA 17 || specific to Plaintiff and Plaintiffs decision to opt-out of the SCA. The parties are directed 18 ||to contact the Magistrate Judge’s chambers with any discovery management issues or 19 ||}concerns. Defendants may renew their motion to compel arbitration within five days of 20 || the conclusion of discovery. 21 IT IS SO ORDERED. 22 , fl ) J 23 DATED: April 20, 2020 ( yild A A (Hophta. 6 24 United States District Judge 25 26 27 28 _11-