Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-02724/USCOURTS-casd-3_12-cv-02724-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1332ed Diversity-Employment Discrimination

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LINDA ANDRADE, individually, and

on behalf of all others similarly

situated; and LILIANA AVILA,

individually, and on behalf of all

others similarly situated,

Plaintiffs,

CASE No. 12CV2724 JLS JMA

ORDER: (1) GRANTING

DEFENDANT’S MOTION TO

COMPEL ARBITRATION; AND 

(2) STAYING JUDICIAL

PROCEEDINGS

(ECF No. 11)

vs.

P.F. CHANG’S CHINA BISTRO,

INC.,

Defendant.

Presently before the Court is Defendant P.F. Chang’s China Bistro Inc.’s

(“Defendant”) motion to compel arbitration and to dismiss or stay proceedings. (ECF

No. 11.) Also before the Court are Plaintiffs Linda Andrade and Liliana Avila’s

(“Plaintiffs”) amended opposition to Defendant’s motion, (ECF No. 18), and 

Defendant’s reply in support, (ECF No. 19). Having reviewed the applicable facts and

the law, the Court GRANTS Defendant’s motion to compel arbitration and STAYS

these judicial proceedings pending the outcome of arbitration. 

///

///

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BACKGROUND

 Plaintiffs filed their operative First Amended Complaint (“FAC”) on

December 12, 2012. (ECF No. 8.) Plaintiffs allege in their FAC that Defendant,

acting as Plaintiffs’ employer, failed to provide complete, detailed wage statements

to Plaintiffs and others similarly situated as required by California Labor Code

sections 226(a) and 1174, the I.W.C. Wage Order 5-2001(7), and the California

Business & Professions Code sections 17200-17208. (ECF No. 8 at ¶¶ 4-6, 16, 24-

28.) Plaintiffs bring these claims as a class action. (Id. at ¶¶ 13-29.) Plaintiffs

additionally bring claims against Defendant for violations of California Labor Code

sections 226(a) and 1174, and the I.W.C. Wage Order 5-2001(7) as a Private

Attorney General Act (“PAGA”) representative cause of action. (Id. at ¶¶ 34-36.) 

Plaintiffs allege that Defendant omitted applicable hourly wage rates from pay

statements. (Id. at ¶ 4.) Plaintiffs assert that these practices prevented themselves

and others similarly situated from verifying the accuracy of their pay statements. 

(Id.) Plaintiffs request that the Court certify a class, enjoin Defendant from

withholding complete wage statements, as well as award statutory damages and

attorney’s fees. (Id. at 9-10.) 

On December 20, 2012, Defendant moved the Court to compel arbitration. 

(ECF No. 11.) Defendant contends that Plaintiffs signed an arbitration agreement,

referred to as the Defendant’s Dispute Resolution Policy (“DRP”), before beginning

employment with Defendant. (ECF No. 11-1 at 8.) The DRP allegedly requires

Plaintiffs to submit their claims individually to arbitration and forbids Plaintiffs from

proceeding with their claims as a class or as a PAGA representative action. (ECF.

No. 11-1 at 6.) Defendant further alleges that the DRP was provided to Plaintiffs in

English, and that if requested, the DRP would have been provided to the Plaintiffs in

Spanish. (ECF No. 11 at 3; Fern. Decl ¶ 3, ECF No. 11-3; Fern. Decl. Ex. B, ECF

No. 19-2.) The DRP at issue contains a cover page, which states in pertinent part:

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We have enclosed P.F. Chang’s China Bistro Inc.’s Dispute Resolution Policy which originally went into effect on September 15, 2006. The enclosed information explains the procedures as well as how the Policy works as a whole. Because this policy applies to you, please take the

time to read the attached material. The Dispute Resolution Policy will provide all employees a quick and efficient avenue to bring forward any

employment related disputes that my arise between you and the

Company. As soon as you have reviewed the policy, please sign the

acknowledgment form and return it to your immediate manager. You

should retain the Dispute Resolution Policy for your files. 

(ECF No. 19-2 at 18.) 

The DRP arbitration agreement itself states, in pertinent part:

This Policy applies to any dispute arising out of or related to an

Employee’s employment with P.F. Chang’s China Bistro . . . or termination of an Employee’s employment. This Policy requires all

such disputes to be resolved only by an arbitrator through final and

binding arbitration and not by way of court or jury trial. Such disputes

include without limitation disputes arising out of or relating to

interpretation or application of this Policy. The Policy also applies, without limitation, to disputes regarding the employment relationship,

trade secrets, unfair competition, compensation, breaks and rest periods,

termination, or harassment and . . . all other statutory and common law claims. . . . 

A neutral arbitrator shall be selected by mutual agreement of the parties. The location of the arbitration proceeding shall be in the general

geographical vicinity of the place where the Employee last worked for P.F. Chang’s unless each party to the arbitration agrees in writing otherwise. If for any reason the parties cannot agree to an arbitrator

within 30 days after a party initially submits the name of an arbitrator

for consideration, one shall be selected through the procedures of the

American Arbitration Association as set forth in their existing National

Rules for the Resolution of Employment Disputes or through the

procedures of any other mutually agreed upon neutral arbitration

service. Except as provided herein, the arbitration shall be conducted in

accordance with the existing National Rules for the Resolution of

Employment Disputes of the American Arbitration Association;

provided however, that the Arbitrator shall allow the discovery

authorized by the Federal Rules of Civil Procedures or any other

discovery required by applicable law in arbitration proceedings. 

However, there will be no right or authority for any dispute to be

brought, heard or arbitrate as a class or collective action, as a private attorney general, or in a representative capacity on behalf of any persons. Also neither party to this agreement will have the right to

participate in a class, representative or collective action, as a class

representative, class member or an opt-in party, act as a private attorney general, or join or consolidate claims with claims of any other person or entity, against the other party hereto. . . .

Each party will pay the fees for his, her or its own attorneys, subject to

any remedies to which that party may later be entitled under applicable law. However, in all cases where required by law, P.F. Chang’s will pay the Arbitrator’s and arbitration fees. If under applicable law P.F.

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Chang’s is not required to pay all of the Arbitrator’s and/or arbitration

fees, such fee(s) will be apportioned between the parties by the

arbitrator in accordance with applicable law. . . . 

The Arbitrator may award any party any remedy to which that party is

entitled under applicable law, but such remedies shall be limited to

those that would be available to a party in a court of law for the claims

presented to and decided by the Arbitrator. The Arbitrator will issue a

decision or award in writing, stating the essential findings of fact and

conclusions of law. Except as may be required by law, neither a party

nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties. Should it become necessary to enforce the Arbitrator’s decision and

award, any party seeking review or enforcement through a court of

competent jurisdiction shall take all legally available steps to preserve the above disclosure requirement. 

(ECF No. 19-2 at 19-20.) LEGAL STANDARD

The Federal Arbitration Act (“FAA”) governs the enforceability of arbitration

agreements in contracts. See 9 U.S.C. § 1, et seq.; Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20, 24-26 (1991). If a suit is proceeding in federal court, the party

seeking arbitration may move the district court to compel the resisting party to submit

to arbitration pursuant to their private agreement to arbitrate the dispute. 9 U.S.C. § 4. 

The FAA reflects both a “liberal federal policy favoring arbitration agreements” and the

“fundamental principle that arbitration is a matter of contract.” AT&T Mobility LLC v.

Concepcion, 131 S. Ct. 1740, 1745 (2011) (internal quotation marks and citations

omitted); see also Kilgore v. Keybank, Nat’l Ass’n, Nos. 09-16703, 10-15934, 2013 WL

1458876 at *4 (9th Cir. Apr. 11, 2013) (en banc) (“The FAA was intended to overcome

an anachronistic judicial hostility to agreements to arbitrate, which American courts had

borrowed from English common law.” (quoting Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 625 n. 14 (1985))); Circuit City Stores, Inc. v.

Adams, 279 F.3d 889, 892 (9th Cir. 2002) (“The [FAA] not only placed arbitration

agreements on equal footing with other contracts, but established a federal policy in

favor of arbitration, and a federal common law of arbitrability which preempts state law

disfavoring arbitration.”) 

In determining whether to compel a party to arbitration, the Court may not review

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the merits of the dispute; rather, the Court’s role under the FAA is limited “to

determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether

the agreement encompasses the dispute at issue.” Cox v. Ocean View Hotel Corp., 533

F.3d 1114, 1119 (9th Cir. 2008) (internal quotation marks and citation omitted). If the

Court finds that the answers to those questions are yes, the Court must compel

arbitration. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). 

In determining the validity of an arbitration agreement, the Court applies state

law contract principles. Adams, 279 F.3d at 892; see also 9 U.S.C. § 2. The FAA

includes a savings clause that allows arbitration agreements to be invalidated only

“upon such grounds as exist at law or in equity for the revocation of any contract.” 9

U.S.C. § 2 (emphasis added). Thus, the FAA does not permit arbitration agreements

to be declared unenforceable by contract defenses “that apply only to arbitration or

derive their meaning from the fact that an agreement to arbitrate is at issue.” 

Concepcion, 131 S. Ct. at 1746 (citation omitted). As the Supreme Court’s opinion in

Concepcion makes clear, if a doctrine generally applicable to contract enforceability

such as unconscionability, is applied by a state in a fashion that disfavors arbitration,

then that rule interferes with arbitration and is preempted by the FAA. Id. at 1747-50

(“When state law prohibits outright the arbitration of a particular type of claim, the

analysis is straightforward: The conflicting rule is displaced by the FAA. . . . [A] court

may not rely on the uniqueness of an agreement to arbitrate as a basis for a state-law

holding that enforcement would be unconscionable, for this would enable the court to

effect what . . . the state legislature cannot.”) (internal quotation marks omitted). Thus,

“[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is

desirable for unrelated reasons.” Concepcion, 131 S. Ct. at 1753; see also Coneff v.

AT&T Corp., 673 F.3d 1155, 1159 (9th Cir. 2012). 

If the Court determines that a valid arbitration agreement encompasses the

dispute, then the FAA requires the Court to enforce the arbitration agreement according

to its terms. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th

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Cir. 2004); see also Simula Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999)

(noting that arbitration agreements must be rigorously enforced); Volt Info. Scis., Inc.,

v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 469 (1989) (noting that

the purpose of the FAA “is simply to ensure the enforceability, according to their terms,

of private agreements to arbitrate”). “The [FAA] leaves no place for the exercise of

discretion by a district court, but instead mandates that district courts shall direct the

parties to proceed to arbitration on issues as to which an arbitration agreement has been

signed.” Dean Witter Reynolds, 470 U.S. at 218. The party opposing arbitration bears 

the burden of establishing the arbitration provision is invalid. Franco v. Athens

Disposal Co., Inc., 171 Cal. App. 4th 1277, 1287 (Cal. Ct. App. 2009). If arbitration

is compelled, the court must stay litigation of arbitrable claims until such arbitration

“has been had in accordance with the terms of the agreement . . . .” 9 U.S.C. § 3; see

also Kilgore, 2013 WL 1458876, at *2. 

ANALYSIS

Defendant contends that all claims advanced by Plaintiffs are subject to

arbitration pursuant to the DRP agreement. (ECF No. 11.) In opposition, Plaintiffs

contend that the arbitration agreement is unenforceable and that Plaintiffs’ claims are

not covered by the scope of the arbitration agreement. (See generally ECF No. 18.) 

I. Enforceability of the Arbitration Agreement

The Court must first determine if the DRP’s arbitration provision is enforceable.

Plaintiffs contend that arbitration is unenforceable because: 1) Gentry v. Superior Court

prevents Plaintiffs’ class action claims from being arbitrated; 2) Defendant’s DRP is

unconscionable; and 3) the DRP waives Plaintiffs’ Private Attorney General Act

(“PAGA”) representative claims.1

 ( Id.) The Court will address each of Plaintiffs’

arguments in turn. 

1

Plaintiffs also argue that Defendant’s DRP impermissibly restricts plaintiffs’ First Amendment Rights. (ECF No. 18 at 14.) The Court acknowledges but summarily dismisses this argument because the First Amendment governs only state actors, not

private actors such as Defendant. See, e.g., Peterson v. Hewlett-Packard Co., 358 F.3d

599, 605 (9th Cir. 2004); Parris v. Superior Court, 109 Cal. App. 4th 285 (Cal. Ct. App. 2003).

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A. Whether Gentry Precludes Enforcement 

Prior to the Supreme Court’s ruling in Concepcion, the California Supreme Court

in Gentry v. Superior Court held that class action waivers in employment arbitration

agreements could not be enforced if a class action claim would be a significantly more

effective way of vindicating plaintiffs’ rights. 42 Cal. 4th 443 (2007). The Gentry

court directed lower courts to utilize the following four factors to determine if a class

action waiver in an employment arbitration agreement may be enforced: “the modest

size of the potential individual recovery, the potential for retaliation against members

of the class, the fact that absent members of the class may be ill informed about their

rights, and other real world obstacles to the vindication of class members’ right to

overtime pay through individual arbitration.” Id. at 463; see also Lewis v. UBS Fin.

Servs., 818 F. Supp. 2d 1161, 1167 (N.D. Cal. 2011); Valle v. Lowe’s HIW, Inc., No.

11-1489 SC, 2011 WL 3667441, at *6 (N.D. Cal. Aug. 22, 2011). 

Plaintiffs contend that all four Gentry factors are present in the instant action. 

Plaintiffs contend that: 1) recovery is limited to a modest maximum recovery of fourthousand dollars ($4,000.00) under California Labor Code section 226(e)(1); 2) there

is an actual or perceived risk of retaliation to Defendant’s current employees; 3) without

retaining an attorney, class members will remain unaware of their legal rights; and 4)

a real world obstacle to the vindication of class members’ legal rights exists because the

amount in controversy is too small to justify the cost of counsel or the time required to

litigate the dispute. (ECF No. 18 at 16.) Thus, Plaintiffs contend that the DRP’s waiver

of class action claims is unenforceable under Gentry. (Id.)

However, as noted by Defendant, several courts have held that Gentry was

overruled by Concepcion and no longer precludes enforcement of class action waivers

in arbitration agreements.2

 In Concepcion, the Supreme Court held that “[r]equiring the

availability of classwide arbitration interferes with fundamental attributes of arbitration

2

 See, e.g., Morvant v. P.F. Chang’s China Bistro, Inc., 870 F. Supp. 2d 831, 840-41 (N.D. Cal. 2012); Lewis, 818 F. Supp. 2d at 1166-68; Valle, 2011 WL 3667441,

at *6.

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and thus creates a scheme inconsistent with the FAA.” Concepcion, 131 S. Ct. at 1748. 

The Supreme Court concluded that “under the FAA, states could not condition the

enforceability of arbitration agreements on the availability of classwide arbitration 

procedures.” Quevedo v. Macy’s Inc., 798 F. Supp. 2d 1122, 1142 (C.D. Cal. 2011)

(internal quotations marks and citations omitted). For the foregoing reasons, the Court

also finds that Gentry no longer precludes enforcement of arbitration agreements in

light of Concepcion.

In deciding Gentry, the California Supreme Court extended the Discover Bank

rule which holds that a class action waiver provision in a consumer arbitration

agreement is unenforceable under a specialized test for unconscionability. See Lewis,

818 F. Supp. 2d at 1166. However, the Supreme Court explicitly abrogated this rule,

holding that the rule was preempted by the FAA. Concepcion, 131 S. Ct. at 1747;

Brown v. Ralph’s Grocery Co., 197 Cal. App. 4th 489, 496 (Cal. Ct. App. 2011) (“[T]he

[Supreme] [C]ourt held that the California Supreme Court’s rule in Discover Bank v.

Superior Court . . . that class action waivers in consumer arbitration agreements may

be unenforceable or unconscionable–is preempted by the FAA.”); Lewis, 818 F. Supp.

2d. at 1167 (“Concepcion abrogated Discover Bank . . . . ”). The reasoning behind the

Discover Bank rule, which the Supreme Court expressly abrogated, and Gentry is

similar. See Morvant, 870 F. Supp. 2d at 841 (“The Court can find no principled basis

to distinguish between Discover Bank . . . and Gentry. Each decision looked to the

modest size of individuals’ potential recovery, unequal knowledge and bargaining

power in the contractual relationship, and other real world obstacles to the vindication

of the individuals’ rights.”) (internal quotation marks omitted). Accordingly, the Court

cannot recognize any distinction between Discover Bank and Gentry that would

preserve Gentry’s applicability in light of Concepcion.

Moreover, the Supreme Court has made it clear that “when state law prohibits

outright the arbitration of a particular type of claim, the analysis is straightforward: The

conflicting rule is displaced by the FAA.” Concepcion, 131 S. Ct. at 1747. Gentry, like

Discover Bank, is a state-law contract defense that applies only to arbitration provisions. 

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See Valle, 2011 WL3667441, at *5; see also Murphy v. DIRECTV, Inc., No. 2:07-cv06454-JHN-VBKx, 2011 WL 3319574, at *4 (C.D. Cal. Aug. 2, 2011) (“[I]t is clear to

the Court that Concepcion overrules Gentry . . . .”). Further, to the extent that Gentry

is based on the policy of preserving “effective vindication of rights” for plaintiffs

through class actions, “such unrelated policy concerns, however worthwhile, cannot

undermine the FAA.” Coneff, 673 F.3d at 1159.

Finally, the Supreme Court’s recent decision in American Express Co. v. Italian

Colors Restaurant provides further support that Gentry is preempted by the FAA. 133

S. Ct. 2304 (2013). In American Express Co., the Supreme Court held that an

arbitration agreement containing a class action wavier could not be found unenforceable

on the ground that enforcement bars “effective vindication [of plaintiffs’ rights],”

because plaintiffs “ have no economic incentive to pursue their . . . claims individually

in arbitration.” Id. at 2308, 2310. The Supreme Court reasoned that “the FAA’s

command to enforce arbitration agreements trumps any interest in ensuring the

prosecution of low value claims,” because “the latter interest . . . is ‘unrelated’ to the

FAA.” Id. at 9 (citing Concepcion, 131 S. Ct at 1753); see also id. at 2312-13 (Thomas,

J., concurring) (holding that the economic infeasibility of bringing a claim is not a

ground for the non-enforcement of an arbitration agreement that is recognized by the

FAA). 

For the foregoing reasons, the Court acknowledges the policy considerations

underlying Gentry, but must hold that Gentry cannot preclude enforcement of the DRP

in light of Concepcion. 

B. Unconscionability

Plaintiffs contend that, because the DRP is unconscionable, the arbitration

agreement itself is unconscionable and unenforceable. (ECF No. 18 at 4-10.) “Because

unconscionability is a generally applicable defense to contracts, California courts may

refuse to enforce an unconscionable arbitration agreement.” Ingle v. Circuit City Stores,

Inc., 328 F.3d 1165, 1171 (9th Cir. 2003); see also Concepcion, 173 S. Ct. at 1746. 

Unconscionability has both a procedural and a substantive component under California

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law. Both components must be present before a court may refuse to enforce a contract

on the basis of unconscionability. Armendariz v. Found. Health Psychcare Servs. Inc.,

24. Cal. 4th 83, 114 (2000). However, both components need not be present to the

same degree, and courts employ a “sliding scale” approach to evaluate

unconscionability. Id. at 114; Gentry, 42 Cal. 4th 443, 469 (2007); see also Nagrampa

v. MailCoups, Inc., 469 F.3d 1257, 1280 (9th Cir. 2006) (“[E]ven if the evidence of

procedural unconscionability is slight, strong evidence of substantive unconscionability

will tip the scale . . . .”). With this standard in mind, the Court next addresses Plaintiffs’

unconscionability argument. 

I. Procedural Unconscionability 

Plaintiffs contend that the DRP is procedurally unconscionable because it is

“characterized by a high degree of oppression and surprise.” (ECF No. 18 at 9-10.) 

Plaintiffs further contend that the DRP is a contract of adhesion. (Id.) 

The procedural prong of the unconscionability analysis focuses on the

circumstances surrounding the negotiation of the contract. Gatton v. T-Mobile USA,

Inc., 152 Cal. App. 4th 571, 581 (Cal. Ct. App. 2007). Specifically, procedural

unconscionability arises from oppression or surprise. Armendariz, 24 Cal. 4th at 114. 

“Oppression arises from an inequality of bargaining power which results in no real

negotiation and an absence of meaningful choice.” Bruni v. Didion, 160 Cal. App. 4th

1272, 1288 (Cal. Ct. App. 2008) (internal quotation marks omitted); Ferguson v.

Countrywide Credit Indus., Inc., 298 F.3d 778, 783 (9th Cir. 2002). “Surprise involves

the extent to which the supposedly agreed-upon terms of the bargain are hidden in a

prolix printed form drafted by the party seeking to enforce the disputed terms.” Id. 

Generally, a contract contains an element of oppression if it is a “contract of adhesion,

one in which there was an inequality of bargaining power denying the weaker party the

opportunity to negotiate the terms of the contract.” Morvant, 870 F. Supp. 2d at 838

(citing Armendariz, 24 Cal. 4th at 114). “[I]n the case of preemployment arbitration

contracts, the economic pressure exerted by employers on all but the most sought-after

employees may be particularly acute, for the arbitration agreement stands between the

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employee and necessary employment, and few employees are in a position to refuse a

job because of an arbitration requirement.” Id. (quoting Armendariz, 24 Cal. 4th at

115). 

Here the DRP unquestionably contains some characteristics of a contract of

adhesion: it is a standardized contract drafted by Defendant, the party with superior

bargaining power making an offer of employment. The DRP was tendered with the

understanding that the terms could not be negotiated and that Plaintiffs would not be

given employment without signing the DRP. (ECF No. 18-3 ¶ 4 ; ECF No. 18-4 ¶ 4.) 

Accordingly, the DRP contains at least a small amount of oppression and thus some

procedural unconscionability. See Morvant, 870 F. Supp. 2d at 839 (holding that a

nearly identical arbitration agreement was an adhesive contract that “demonstrated at

least some amount of procedural unconscionability”). 

However, the Court finds that the DRP does not constitute an unfair surprise. 

The DRP’s cover page requested the Plaintiffs to “please take the time to read the

attached materials.” (ECF. No 19-2 at 18.) Moreover, the effect of the DRP is clear to

a reader. The cover page states, “this policy applies to you,” and clearly indicates that

the agreement binds employees to submit disputes to arbitration. The title of the DRP

itself clearly states “Dispute Resolution Policy” in bolded font. (Id. at 18-19); see

Luchini v. Carmax, Inc., No. CV F 12-0417 LJO DLB, 2012 WL 2995483, at *9 (E.D.

Cal. July 23, 2012) (holding that an employment arbitration agreement was not

procedurally unconscionable where the agreement was designated “Dispute Resolution

Agreement”). Further, the substance of the DRP’s terms are opaque. The DRP’s terms

are contained in seven short paragraphs spanning less than two pages, and the word

“arbitration” appears in the very first sentence of these terms. (Id. at 19.) The waiver

of the right to bring a class action claim or PAGA claim is not located within a maze

of text, but is instead located in the last two sentences of the fourth paragraph. (Id. at

19-20.) Finally, both the DRP agreement and an attached Frequently Asked Questions

(“FAQ”) section state that disputes covered by the DRP will not be heard in court. 

(ECF No. 19-2 at 19, 25.) The FAQ specifically states “you give up the right to have

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your dispute heard by a judge or jury in the court system,” in a short two sentence

paragraph under the heading “Do I give up any rights by agreeing to binding arbitration

?” in bold font. (ECF No. 19-2 at 25.) 

In their opposition, Plaintiffs contend that they did not have a reasonable

opportunity to understand the DRP because their primary language is Spanish and the

terms are written in English. (ECF No. 18 at 10.) However, the Court finds that

Plaintiffs were sufficiently fluent in English to have a reasonable opportunity to

understand the DRP. Plaintiffs’ supervisors have stated that Plaintiffs understand

English. (ECF No. 19-4 at ¶ 3; ECF No. 19-5 at ¶ 4; ECF No. 19-1 at ¶ 5.) Plaintiffs

completed numerous other employment documents written entirely in English. (ECF

No. 19-3 at 12-18.) Moreover, Plaintiffs had an opportunity to review a Spanishlanguage version of the DRP, but neglected to do so. (ECF No. 18 at 10; ECF No. 19-3

at 10-16.) Accordingly, the Court finds that the terms of DRP did not constitute an

unfair surprise to Plaintiffs, and finds the DRP slightly procedurally unconscionable

because of its adhesive nature. See Lagatree v. Luce, Forward, Hamilton & Scripps

LLP, 74 Cal. App. 4th 1105, 1127 (Cal. Ct. App. 1999) (“[A] compulsory predispute

arbitration agreement is not rendered unenforceable just because it is required as a

condition of employment or offered on a ‘take it or leave it’ basis.”).

ii. Substantive Unconscionability 

Because the DRP is only slightly procedurally unconscionable, the Court must

find significant substantive unconscionability to invalidate the DRP under the sliding

scale approach employed by California courts. See Armendariz, 24 Cal. 4th at 114;

Nagrampa, 469 F.3d at 1284; see also West v. Henderson, 227 Cal. App. 3d 1578,

1587-88 (Cal. Ct. App. 1991) (stating that a compelling showing of substantive

unconscionability could potentially overcome a weaker showing of procedural

unconscionability). Thus, in order to establish that the DRP is unenforceable on

unconscionability grounds, Plaintiffs must demonstrate that the terms of the DRP are

substantively unconscionable to a significant degree. See id. The Court finds that

Plaintiffs have failed to do so. 

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The Court’s inquiry into the substantive unconscionability of the arbitration

provision focuses on discerning overly harsh or one-sided results. Armendariz, 24

Cal. 4th at 114. “Substantive unconscionability focuses on the terms of the

agreement and whether those terms are so one-sided as to shock the conscience.” 

Ferguson, 298 F.3d at 784 (internal quotations and citations omitted). An arbitration

agreement is substantively unconscionable unless “the arbitration remedy contains a

modicum of bilaterality.” Ting v. AT&T, 319 F.3d 1126, 1149 (9th Cir. 2003)

(citation omitted). 

Here, the arbitration agreement contains more than a modicum of bilaterality.

Under the DRP, all parties must submit all covered claims to arbitration, abide by a

confidentiality agreement, participate in choosing the arbitrator, and operate under

the same rules of arbitration and discovery. Moreover, Defendant is required to pay

fees associated with mediation as well as the cost of arbitration where required by

law, or a portion of the fees where not required by law. (ECF No. 19-2 at 20.) 

Plaintiffs contend that the DRP is substantively unconscionable because it

contains a confidentiality clause. (ECF No. 18 at 11.) The DRP states that,

“[e]xcept as may be required by law, neither a party nor an arbitrator may disclose

the existence, content, or results of any arbitration hereunder with the prior written

consent of both parties.” (ECF No. 19-2 at 20.) Plaintiffs contend that the DRP is

substantively unconscionable because the DRP contains a confidentiality clause that

“effectively limits talking about the case.”3

 (ECF No. 18 at 11.) 

The Court finds that the cases Plaintiffs rely upon are distinguishable and

inapplicable. In Davis, Pokorny, and Kanbar, the respective courts analyzed a

considerably broader confidentiality agreement than the one at issue here, that

prevented “an employee from contacting other employees to assist in litigating or

(arbitrating) an employee’s case.” Davis, 485 F.3d at 1079; Kanbar, 849 F. Supp.

3

Plaintiffs rely on several cases in support of their contention. See Davis v.

O’Melveny & Myers, 485 F.3d 1066 (9th Cir. 2007); Ting, 319 F.3d 1126 (9th Cir. 2003); Kanbar v. O’Melveny & Myers, 849 F. Supp. 2d 902 (N.D. Cal. 2011); Grabowski v. C.H. Robinson Co., 817 F. Supp. 2d 1159 (S.D. Cal. 2011).

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2d at 905-06; Pokorny, 601 F.3d 987 at 1001-02. Here, the DRP confidentiality

clause is not nearly so broad as to prevent Plaintiffs from engaging in discovery. 

Further, the DRP expressly provides that “the Arbitrator shall allow the discovery

authorized by the Federal Rules of Civil Procedure . . . .” ( ECF No. 19-2 at 20.) 

Moreover, confidentiality agreements alone do not necessarily render an

arbitration agreement substantively unconscionable. See Davis, 485 F.3d at 1079. In

the cases cited by Plaintiffs, the courts did not solely rely on the confidentiality

clause in finding the arbitration agreement unconscionable, but instead found

multiple provisions of the arbitration agreement at issue to be substantively

unconscionable. See id. at 1084 (finding the arbitration agreement had four

substantively unconscionable provisions); Kanbar, 849 F. Supp. 2d at 911

(compelling arbitration but severing three unconscionable provisions); Pokorny, 601

F.3d at 1001 (finding that the arbitration agreement lacked mutuality in terms of

claims to be arbitrated and time limitations for bringing claims); Ting, 319 F.3d at

1151 (holding that the arbitration agreement contained an unconscionable feesplitting provision). 

 Finally, confidentiality clauses in employment arbitration agreements similar

to the one at issue here have been enforced. In Htay Htay Chin v. Advanced Fresh

Concepts Franchise Corp., a nearly identical confidentiality clause that provided,

“except as may be required by law, no party or arbitrator may disclose the existence,

content or results of any arbitration hereunder without the prior written consent of

both parties,” was found to not be unconscionable because of its limited breadth. 

194 Cal. App. 4th 704, 714 (Cal. Ct. App. 2011); see also Morvant, 870 F. Supp. 2d

at 839 (finding a nearly identical arbitration agreement to the one at issue here to not

be substantively unconscionable).

For the foregoing reasons, the Court finds that the DRP is not substantively

unconscionable. Therefore, because Plaintiffs have failed to establish the required

elements of unconscionability, the Court finds that the DRP is not unenforceable on

unconscionability grounds. 

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C. Waiver of PAGA Claims

Plaintiffs additionally argue that the DRP’s prohibition of PAGA representative 

claimsrendersthe arbitration agreement illegal and unenforceable. (ECF No. 18 at 15-

17.) PAGA is a statutory cause of action that “authorizes an aggrieved employee . . .

to recover civil penalties on behalf of himself and other current or former employees.” 

Franco, 171 Cal. App. 4th at 1300 (internal quotation marks omitted); see also Cal.

Lab. Code § 2698; Arias v. Superior Court, 46 Cal. 4th 969, 986 (2009) (“An employee

plaintiff suing . . . under the Labor Code Private Attorneys General Act of 2004, does

so as the proxy or agent of the state’s labor law enforcement agencies.”). PAGA is

designed to “remedy the understaffing of California’s labor law enforcement agencies

by granting employees the authority to bring civil actions against their employers for

Labor Code Violations.” Id. at 1301 (citation omitted); Arias, 46 Cal. 4th at 986;

Brown, 197 Cal. App. 4th at 502. “PAGA serves the public interest by insuring that

violating employers will not benefit from decreased labor law enforcement staffing

levels.” Valle, 2011 WL 3667441, at *5; Cal. Lab. Code §§ 2698(c),(d). 

While the Court recognizes the public interest considerations served by PAGA

claims, the Court does not find that the DRP is unenforceable because it requires

employees to waive their PAGA claims. As discussed previously, the Supreme Court

has held that “[w]hen state law prohibits outright the arbitration of a particular type of

claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.”

131 S. Ct. at 1748. Irrespective of the policy considerations of a state law, “a state

cannot require a procedure that is inconsistent with the FAA, even if it is desirable . .

. .” Luchini, 2012 WL 2995483, at *13 (quoting Concepcion, 131 S. Ct. at 1747). The

Ninth Circuit echoed this sentiment when it interpreted Concepcion broadly, holding

that the policy concerns of state legislative actions, “however worthwhile, cannot

undermine the FAA.” Coneff, 673 F.3d at 1159. Accordingly, to preclude enforcement

of the DRP arbitration agreement on the basis of the PAGA representative waiver would

allow a state law to “prohibit[] outright the arbitration of a particular type of claim,” 

a result explicitly preempted by the FAA. See Concepcion, 131 S. Ct. at 1748. Many

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other courts have similarly held that PAGA claims cannot preclude enforcement of

employment arbitration agreements. See Morvant, 870 F. Supp. 2d at 845 (“[T]he Court

must enforce the parties’ Arbitration Agreement even if this might prevent Plaintiffs

from acting as private attorneys general.”); Quevedo, 798 F. Supp. 2d at 1142 (holding

that employment arbitration agreements with provisions barring employees from bring

representative PAGA claims are enforceable); Luchini, 2012 WL 2995483, at *13-14 

(holding that PAGA is a state law claim that cannot be interpreted to outright prohibit

arbitration because such a result would be in contravention of the FAA); Grabowski,

2011 WL 4353998, at *19 (holding that Concepcion prohibited non-enforcement of

arbitration agreement that contained provision barring plaintiff from bring

representative PAGA action); Valle, 2011 WL 3667441, at *6 (N.D. Cal. Aug. 22,

2011) (“Plaintiffs’ PAGA claim is a state-law claim, and states may not exempt claims

from the FAA.” (citing Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996))); 

Nelson v. AT&T Mobility LLC, No. C10-4802 THE, 2011 WL 3651153, at *4 (N.D.

Cal. Aug. 18, 2011) (“Concepcion preempts California law holding that a PAGA claim

is inarbitrable . . . .”).

In opposition, Plaintiffs contend that the Court should find that representative

PAGA claims cannot be waived in employment arbitration agreements, as the California

Court of Appeals held in Brown v. Ralphs Grocery Company. 197 Cal. App. 4th 489

(Cal. Ct. App. 2011). In Brown, the court held that the FAA did not preempt state laws

as to the unenforceability of PAGA representative action waivers in arbitration

agreements. Id. at 502-03. That court noted that PAGA representative actions are “for

the benefit of the of the general public” and that a “representative action has significant

institutional advantages over a single claimant arbitration.” Id. at 501-02 (internal

quotation marks omitted). In doing so, that court reasoned that representative PAGA

actions uniquely “punish and deter employer practices that violate the rights of . . .

employees under the Labor Code” and “[i]f the FAA preempted state law as to the

unenforceability of the PAGA representative action waivers, the benefits of private

attorney general actions to enforce state labor laws would, in large part, be nullified.” 

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Id. at 502. The Brown court distinguished PAGA claims from the holding in

Concepcion by stating that the PAGA involves a public right, while Concepcion only

dealt with the “private individual right of a consumer to pursue class action remedies.” 

Id. at 500; see also Urbino v. Orkin Servs., 882 F. Supp. 2d 1152, 1167 (C.D. Cal.

2011) (adopting the reasoning of Brown and holding that a PAGA arbitration waiver

is unconscionable and thus unenforceable). 

The Court declines to follow this line of reasoning. For the aforementioned

reasons, Concepcion cannot be read so narrowly as to distinguish between a waiver of

a private individual right to class action and a waiver of a public right to a PAGA

claim. Accordingly, the Court concludes that the DRP’s PAGA representative action

waiver does not render the DRP agreement unenforceable. 

II. Scope of the Arbitration Provision

Having determined the enforceability of the DRP agreement, the Court must next

look to determine “whether the agreement encompasses the dispute at issue.” Cox, 533

F.3d at 1119. Despite the liberal policy favoring arbitration agreements, courts may

only order arbitration for claims that parties have agreed to submit to arbitration. See

9 U.S.C. § 2; Captain Bounce, Inc. v. Bus. Fin. Servs., Inc., No. 11-CV-858 JLS

(WMC), 2012 WL 928412, at *4 (S.D. Cal. Mar. 19, 2012). In determining the scope

of an arbitration provision, “[i]t is well established ‘that where the contract contains an

arbitration clause, there is a presumption of arbitrability.’” Comedy Club, Inc. v.

Improv W. Assocs., 553 F.3d 1277, 1284 (9th Cir. 2009) (quoting AT&T Techs., Inc. v.

Commc’ns Workers of Am., 475 U.S. 643, 650 (1986)). Accordingly, doubts as to

whether an arbitration clause covers a dispute “should be resolved in favor of

coverage.” Id. at 1284; see also Three Valleys Mun. Water Dist. v. E.F. Hutton & Co.,

925 F.2d 1136, 1139 (9th Cir. 1991). To determine whether a claim is covered by an

arbitration provision, courts “apply ordinary state-law principles that govern the

formation of contracts.” Id. (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S.

938, 944 (1995)). Pursuant to California contract law, clear and explicit language

governs a contract’s interpretation, provided such an interpretation does not lead to an

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“absurdity.” Cal. Civ. Code § 1638. If possible, the language of the contract alone

delineates the intention of the parties. Id. § 1639. 

Defendant contends that Plaintiffs’ claims must be subject to arbitration under

the DRP because the DRP governs any and all disputes arising from employment with

Defendant. (ECF No. 11-1 at 11.) As highlighted by Defendant, the DRP governs “any

dispute arising out of or related to an Employee’s employment,” and expressly includes,

but is not limited to, disputes regarding “compensation” and claims arising under “state

statutes” and “all other state statutory and common law claims.” (ECF No. 19-2 at 19.) 

The DRP further states that “neither party . . . will have the right to participate in a

class, representative or collection action, as a class representative, class member . . . or

act as a private attorney general . . . .” (Id. at 20.)

Here, all of Plaintiffs’ claims arise from Defendant’s alleged failure to provide

proper wage statements. Accordingly, the Court finds that all of Plaintiffs’ claims

“aris[e] out of or [are] related to an Employee’s employment.” (Id. at 19); see also

Morvant, 870 F. Supp. 2d at 831 (holding that plaintiffs’ claims for failing to provide

accurate wage statements, inter alia, were covered by an arbitration agreement that

provided “any dispute arising out of or related to an Employee’s employment”). 

Moreover, Plaintiffs’ claims arise specifically in regard to “compensation”; a subject

that is expressly covered by the DRP. (Id. at 19.)

Plaintiffs contend that, despite the plain language of the DRP, the Plaintiffs’

PAGA claims are not within the scope of the DRP. (ECF No. 18 at 16.) Plaintiffs

contend that Defendant intended to omit PAGA actions from the DRP’s coverage of

arbitrable claims because Defendant anticipated that, in the event of a dispute similar

to the instant action, a California court would invalidate the entire arbitration clause. 

(ECF No. 18 at 16 (citing Brown, 197 Cal. App. 4th 489).) Thus, Plaintiffs contend that

their PAGA claims are not within the scope of claims governed by the DRP. (Id.)

However, Plaintiffs’ contention fails to account for the fact that Defendant

expressly included language within the DRP excluding both parties’ right to bring

PAGA claims. (ECF No. 19-2 at 20.) Plaintiffs’ contention further conflicts with the

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express language of the DRP, which states that it governs “any dispute arising out of

or related to an Employee’s employment,” including all claims arising under “state

statutes” and all other “common law claims.” (Id. at 19.) Plaintiffs’ PAGA claims

arise under state statute and arise from Plaintiffs’ employment. See Cal. Lab. Code §

2698. et seq. Therefore, Plaintiffs’ PAGA claims are within the scope of the DRP. 

Pursuant to California contract law and in light of the policy favoring broad

liberality in determining the scope of arbitration provisions, the Court cannot read the

DRP to mean anything other than its plain meaning because the language is clear and

explicit. See, e.g., Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,

24-25 (1983) (“[A]ny doubts concerning the scope of arbitrable issues should be

resolved in favor of arbitration . . . .”); Rep. of Nicaragua v. Standard Fruit Co., 937

F.2d 469, 478-79 (9th Cir. 1991) (holding that an arbitration clause containing the

language “any and all disputes” must be interpreted liberally); Robinson v. Issacs, No.

11CV1021 JLS (RBB), 2011 WL 4862420, at *3 (S.D. Cal. Oct. 12, 2011) (“[T]he FAA

requires [the court] to rigorously enforce agreements to arbitrate and resolve any doubts

concerning the scope of arbitrable issues in favor of arbitration.”) (internal quotation

marks and citations omitted). 

Accordingly, the Court finds that Plaintiffs’ claims fall within the scope of claims

covered by the DRP, and GRANTS Defendant’s Motion to Compel Arbitration.

III. Stay of the Judicial Proceedings

Pursuant to 9 U.S.C. § 3, the Court shall order a stay of judicial proceedings

“pending compliance with a contractual arbitration clause.” Martin Marietta

Aluminum, Inc. v. Gen. Elec. Co., 586 F.2d 143, 147 (9th Cir. 1978). The FAA

provides

If any suit or proceeding be brought in any of the courts of the United

States upon any issue referable to arbitration under an agreement in

writing for such arbitration, the court in which such suit is pending,

upon being satisfied that the issue involved in such suit or proceeding is

referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has

been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in the proceeding with such arbitration.

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9 U.S.C. § 3. Accordingly, the Court STAYS these judicial proceedings pending the

outcome of any arbitration. 

CONCLUSION

For the aforementioned reasons, the Court GRANTS Defendant’s Motion to

Compel Arbitration and STAYS this judicial action pending the outcome of any

arbitration. 

IT IS SO ORDERED.

DATED: August 9, 2013

Honorable Janis L. Sammartino

United States District Judge

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