Villanueva v. Maxim Healthcare Services, Inc.

CourtDistrict Court, N.D. California
DecidedSeptember 11, 2023
Docket3:23-cv-03403
StatusUnknown

This text of Villanueva v. Maxim Healthcare Services, Inc. (Villanueva v. Maxim Healthcare Services, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Villanueva v. Maxim Healthcare Services, Inc., (N.D. Cal. 2023).

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CINDY VILLANUEVA, Case No. 23-cv-03403-JSC

8 Plaintiff, ORDER RE: MOTION TO COMPEL 9 v. ARBITRATION

10 MAXIM HEALTHCARE SERVICES, Re: Dkt. No. 8 INC., et al., 11 Defendants.

12 13 Cindy Villanueva brings a putative class action against Maxim Healthcare Services, Inc., 14 Maxim Healthcare Services Holdings, Inc., and Maxim Healthcare Staffing Services Inc. 15 (collectively “Maxim”). Maxim moves to compel arbitration according to the terms of an 16 arbitration agreement Villanueva signed. Because the parties signed a valid arbitration agreement 17 that covers Villanueva’s claims, the Court grants Maxim’s motion to compel arbitration. 18 I. COMPLAINT ALLEGATIONS 19 Maxim proves healthcare staffing services to hospitals and healthcare facilities throughout 20 California. (Dkt. No. 1-1 ¶ 2.) Villanueva alleges Maxim “engaged in a systematic pattern of 21 wage and hour violations” under California Law, including, in part, failing to pay minimum and 22 overtime wages, failing to provide meal periods or rest breaks, and failure to reimburse necessary 23 business expenses. (Id. ¶¶ 3-4.) Plaintiff seeks to bring this action on behalf of a class of 24 Maxim’s employees. (Id. ¶ 20.) 25 II. PROCEDURAL HISTORY 26 Villanueva filed her action in California state court and Defendant removed the action to 27 this Court. (Dkt. No. 1.) Maxim then filed a Motion to Compel Arbitration. (Dkt. No. 8.) 1 when she signed an arbitration agreement as part of her onboarding. (Id. at 8-9.) Villanueva 2 opposes Maxim’s motion, asserting the arbitration agreement is unconscionable and therefore, 3 unenforceable. (Dkt. No. 18 at 5.) 4 III. DISCUSSION 5 The Federal Arbitration Act [“FAA”] governs arbitration agreements “evidencing a 6 transaction involving commerce.” 9 U.S.C. § 2. Such agreements “shall be valid, irrevocable, and 7 enforceable, save upon such grounds as exist at law or in equity for the revocation of any 8 contract.” Id. In resolving a motion to compel arbitration, this Court must decide two “gateway” 9 issues: “(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement 10 encompasses the dispute at issue. If both conditions are met, the [FAA] requires the court to 11 enforce the arbitration agreement in accordance with its terms.” Lim v. TForce Logistics, LLC, 8 12 F.4th 992, 999 (9th Cir. 2021) (cleaned up). 13 A. Gateway Issues Were Not Delegated to the Arbitrator 14 Before addressing either of the gateway issues, the Court must decide whether the 15 determination of those issues is itself delegated to the arbitrator. Id., 999–1000 (Both “gateway 16 issues can be expressly delegated to the arbitrator.”). The Ninth Circuit instructs courts to apply a 17 “more rigorous standard” than a traditional application of contract principles “in determining 18 whether the parties have agreed to arbitrate the question of arbitrability.” Momot v. Mastro, 652 19 F.3d 982, 987 (9th Cir. 2011). “Courts should not assume that the parties agreed to arbitrate 20 arbitrability unless there is clear and unmistakable evidence that they did so.” First Options of 21 Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (cleaned up). 22 Section XII of the agreement, titled “Judicial Enforcement” establishes “[e]ither 23 EMPLOYEE or MAXIM may bring an action in any court of competent jurisdiction to compel 24 arbitration of this agreement.” (Dkt. No. 8-3 at 24.) Thus, the arbitration agreement itself 25 indicates parties have agreed determination of gateway issues is for the Court, not an arbitrator. 26 Maxim argues the arbitration agreement’s incorporation of the American Arbitration 27 Association (AAA) rules constitutes clear and unmistakable intent to delegate arbitrability 1 The explicit terms of the arbitration agreement control any conflict between that agreement and 2 AAA rules. See Fitz v. NCR Corp., 118 Cal. App. 4th 702, 721 (2004) (when agreement 3 incorporates AAA rules by reference, explicit terms of agreement regarding discovery provisions 4 control even though they conflicted with AAA rules on discovery). Moreover, even assuming the 5 AAA rules applied to this issue, Brennan left unresolved whether its ruling applies when at least 6 one of the arbitration agreement parties is unsophisticated. Brennan, 796 F.3d at 1131; see also 7 MacClelland v. Cellco P'ship, No. 21-CV-08592-EMC, 609 F.Supp.3d 1024, 2022 WL 2390997, 8 at *3 (N.D. Cal. July 1, 2022) (“Where at least one party is unsophisticated, courts in this district 9 and elsewhere have routinely found that the incorporation of the AAA rules is insufficient to 10 establish a clear and unmistakable agreement to arbitrate arbitrability”). 11 As the party seeking to enforce the contract, Maxim bears the burden of establishing the 12 delegation clause is enforceable. See Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011) 13 (“[G]ateway issues of arbitrability presumptively are reserved for the court”); Ingalls v. Spotify 14 USA, Inc., No. C 16-03533 WHA, 2016 WL 6679561, at *4 (N.D. Cal. Nov. 14, 2016) 15 (Explaining the party seeking to compel arbitration has the “burden to establish that the delegation 16 clause is enforceable”). Since Maxim did not demonstrate Villanueva was a sophisticated party 17 and did not address why Brennan should apply if Villanueva is unsophisticated, Maxim failed to 18 establish the parties delegated the threshold arbitrability question to the arbitrator. Thus, this 19 Court will proceed by deciding the gateway issues itself. 20 B. A Valid Agreement to Arbitrate Exists 21 As to the first gateway issue, it is undisputed that before she began employment with 22 Maxim, Villanueva signed a document titled “Mutual Agreement to Arbitrate Employment- 23 Related Disputes.” (Dkt. No. 18 at 7.) That agreement includes all Defendants. (Dkt. Nos. 8 at 24 16, 8-3 at 20.) However, under the Federal Arbitration Act (“FAA”), agreements to arbitrate may 25 be found invalid “upon such grounds as exist at law or in equity for the revocation of any 26 contract.” 9 U.S.C. § 2. Federal courts apply state contract law to determine whether an 27 arbitration agreement is enforceable. Pokorny v. Quixtar, 601 F.3d 987, 994 (9th Cir. 2010). 1 agreement is unconscionable and thus unenforceable. “Under California law, a contractual 2 provision is unenforceable if it is both procedurally and substantively unconscionable.” Kilgore v. 3 KeyBank, Nat'l Ass'n, 718 F.3d 1052, 1058 (9th Cir. 2013) (cleaned up). However, procedural and 4 substantive unconscionability need not be present to the same degree: “the more substantively 5 oppressive the contract term, the less evidence of procedural unconscionability is required to come 6 to the conclusion that the term is unenforceable, and vice versa.” Armendariz v. Found. Health 7 Psychcare Servs., Inc., 24 Cal. 4th 83, 114 (2000) (quotation marks and citation omitted). 8 a. Procedural Unconscionability 9 “Procedural unconscionability concerns the manner in which the contract was negotiated 10 and the respective circumstances of the parties at that time, focusing on the level of oppression and 11 surprise involved in the agreement.” Chavarria v.

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Villanueva v. Maxim Healthcare Services, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/villanueva-v-maxim-healthcare-services-inc-cand-2023.