Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-02807/USCOURTS-cand-4_18-cv-02807-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1332 Diversity-Fair Labor Standards Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

NIKOLA LOVIG,

Plaintiff,

v.

BEST BUY STORES LP, et al.,

Defendants.

Case No. 18-cv-02807-PJH 

ORDER COMPELLING ARBITRATION 

AND STAYING CASE

Re: Dkt. No. 15

BACKGROUND

Plaintiff Nikola Lovig was an employee of defendant Best Buy Stores, L.P. (“Best 

Buy Stores”) from approximately April 24, 2004 until May 12, 2017. First Amended 

Complaint (“FAC”), Dkt. 14 ¶ 21; Dkt. 16 (“Sipprell Decl.”) ¶ 3. On April 3, 2018, plaintiff 

brought an action against Best Buy Stores and Best Buy Co., Inc. (together “Best Buy”) 

as a putative class action on behalf of “[a]ll persons employed by Defendants and/or any 

staffing agencies and/or any other third parties in hourly or non-exempt positions in 

California during the Relevant Time Period.” Dkt. 1-1 (Compl.) ¶ 12. The state court 

complaint alleged the following causes of action: (1) failure to provide meal periods, 

(2) failure to provide rest periods, (3) failure to pay hourly wages, (4) failure to provide 

accurate written wage statements, (5) failure to timely pay all final wages, and (6) unfair 

compensation. See Compl. On July 10, 2018, plaintiff filed a FAC, adding a seventh 

cause of action under the Private Attorneys General Act, Cal. Lab. Code §§ 2698, et seq. 

(“PAGA”). See FAC.

Effective March 15, 2016, while plaintiff was employed by Best Buy Stores, 

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defendants implemented an arbitration policy. Sipprell Decl. ¶ 4 & Ex. A at 11(the 

“Arbitration Policy” or “Arbitration Agreement”). Agreeing to the terms of the Arbitration 

Policy was a “mandatory condition of initial and continuing employment at Best Buy” for 

plaintiff. Sipprell Decl., Ex. A at 1. The Arbitration Policy provided that “by . . . remaining 

employed . . . employees agree to this Policy’s terms.” Id. Best Buy Stores provided 

plaintiff and all employees with access to a document entitled “Arbitration Policy 

Frequently Asked Questions (FAQs),” which provides that, “[a]s with any other Best Buy 

policy, by remaining employed, employees are considered to have agreed to the policy.” 

Sipprell Decl. ¶ 6 & Ex. B at 1. Prior to implementation of the Arbitration Policy, Best Buy 

Stores posted the policy to an intranet site that contains Best Buy Stores’ human 

resources policies. Sipprell Decl. ¶ 5.

Over five months later, on August 28, 2016, plaintiff’s manager gave plaintiff a list 

of online training modules for plaintiff to complete, including an information module about 

the Arbitration Policy. Dkt. 22-1 (“Lovig Decl.”) ¶ 5. Plaintiff completed all of the training 

modules except the one covering arbitration. Id. ¶ 6. Plaintiff at that time told his 

manager, Richard Arganda, that he didn’t agree with arbitration agreements and wouldn’t 

sign one with Best Buy. Id. Arganda then went to confer with another manager, Michelle 

Garcia, who plaintiff believed to be a more senior manager. Id. Plaintiff alleges that 

Arganda then told plaintiff that “there are no issues with my [plaintiff’s] refusal to complete 

the training covering the arbitration agreement.” Id. 

In a retaliation complaint plaintiff filed with the California Labor Commissioner’s 

Office, Retaliation Complaint Investigation Unit, at some point during or before 

September 2016, plaintiff alleged that, “[b]y implementing the ‘Arbitration Policy’ they are 

able to force me to quit the company or waive my right to sue” and “[b]y making other 

employees agree to the ‘Arbitration Policy’ or be fired, they position themselves to 

impede/prevent me from starting a class action lawsuit against them[.]” Sipprell Decl. ¶ 9 

 

1 Citations to the Arbitration Policy refer to page numbers 1–6, indicated in the upper-right 

corner of the document.

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& Ex. D.

On or about February 22, 2017, plaintiff was approached by another manager, 

Dragos Damien, who instructed plaintiff to complete several online training modules, 

pointing out specifically the training module covering the arbitration policy. Lovig Decl. 

¶ 7. Plaintiff once again completed all of the training programs except the one covering 

arbitration. Id. Later that day, Damien asked plaintiff whether he completed the 

arbitration training program. Id. ¶ 8. Plaintiff informed Damien that he discussed this 

issue with other managers and that he would not complete the arbitration training module 

as he was not willing and had no desire to sign an arbitration agreement. Id. 

Through the date of his termination on May 12, 2017, plaintiff had not signed any 

arbitration agreement with defendants.2 Id. ¶¶ 2, 10; FAC ¶ 21. Plaintiff claims that he 

was never made aware that by remaining employed with defendants, he was agreeing to 

an arbitration agreement. Id. ¶ 11.

On April 3, 2018, plaintiff filed a complaint in Alameda County Superior Court. On 

May 3, 2018, defendants provided plaintiff’s counsel with materials regarding the 

Arbitration Policy and requested that plaintiff stipulate to arbitrate his claims on an 

individual basis and dismiss the complaint. Dkt. 15-1 ¶ 2 & Ex. 1. Plaintiff’s counsel did 

not respond.

On May 11, 2018, defendants removed the case to this court. Dkt. 1. On July 10, 

2018, plaintiff filed the FAC, adding the PAGA cause of action. See FAC.

DISCUSSION

Defendants move this court for an order compelling plaintiff to arbitrate certain of 

his claims, dismissing plaintiff’s class claims, and staying plaintiff’s PAGA claim pending 

arbitration. The court addresses each request in turn. 

A. Whether Plaintiff Must Arbitrate His Claims

Under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1, et seq., any party bound 

 

2 Neither plaintiff’s nor defendants’ counsel was aware whether plaintiff was fired or quit, 

and the complaint is also silent on the issue.

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to an arbitration agreement that falls within the scope of the FAA may bring a motion in 

federal district court to compel arbitration and stay the proceeding pending resolution of 

the arbitration. 9 U.S.C. §§ 2–4; see also Lifescan, Inc. v. Premier Diabetic Servs., Inc., 

363 F.3d 1010, 1012 (9th Cir. 2004); Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 

119 (2001) (addressing the FAA’s applicability to employment contracts). The FAA 

requires the court to compel arbitration of issues covered by the arbitration agreement. 

Dean Witter Reynolds, Inc., v. Byrd, 470 U.S. 213, 217 (1985). 

In ruling on a motion to compel arbitration under the FAA, the court’s role 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.” Chiron Corp. v. Ortho 

Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000); Lifescan., 363 F.3d at 1012. If 

the answers are yes, the court must enforce the agreement. Id.

Regarding whether an agreement exists to arbitrate, the “first principle” that 

underlies the U.S. Supreme Court’s arbitration decisions is that “[a]rbitration is strictly a 

matter of consent” and thus “is a way to resolve those disputes—but only those 

disputes—that the parties have agreed to submit to arbitration.” Granite Rock Co. v. Int’l 

B’hd of Teamsters, 561 U.S. 287, 299 (2010) (internal quotation marks and citations 

omitted); see also First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995). Thus, 

“a court may order arbitration of a particular dispute only where the court is satisfied that 

the parties agreed to arbitrate that dispute.” Granite Rock, 561 U.S. at 297. 

Regarding the validity of the agreement, the FAA provides that arbitration clauses 

“shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in 

equity for the revocation of any contract.” 9 U.S.C. § 2. Thus, state contract defenses 

may be applied to invalidate arbitration clauses if those defenses apply to contracts 

generally. Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996); Circuit City 

Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 2002) (state law defense, such as 

unconscionability, that applies to contracts generally may also invalidate an arbitration 

agreement). “The party seeking arbitration bears the burden of proving the existence of 

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an arbitration agreement, and the party opposing arbitration bears the burden of 

proving any defense, such as unconscionability.” Pinnacle Museum Tower Assn. v. 

Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 236 (2012). 

Regarding the scope of the agreement, “any doubts concerning the scope of 

arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem'l Hosp. 

v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983). Nevertheless, a motion to compel 

arbitration should be denied if “it may be said with positive assurance that the arbitration 

clause is not susceptible of an interpretation that covers the asserted dispute.” AT&T 

Techs., Inc. v. Commc’n Workers, 475 U.S. 643, 650 (1986). 

1. Whether the Parties Entered into An Arbitration Agreement

The parties dispute whether they entered into an arbitration agreement. Plaintiff 

argues that he never read or assented to the agreement’s terms, so he never accepted or 

entered into the agreement. Defendants argue that plaintiff did in fact know the 

agreement’s terms, and he accepted the Arbitration Policy in the manner specified in the 

policy—by continuing to work.

“While the FAA requires a writing, it does not require that the writing be signed by 

the parties.” Nghiem v. NEC Elec., Inc., 25 F.3d 1437, 1439 (9th Cir. 1994) (internal 

quotation marks omitted). The court applies “ordinary state-law principles that govern the 

formation of contracts to decide whether an agreement to arbitrate exists.” Norcia v. 

Samsung Telecommunications Am., LLC, 845 F.3d 1279, 1283–84 (9th Cir. 2017) 

(internal quotation marks omitted). Here, the parties agree that California law governs 

the issue of contract formation. “In discerning California law, we are bound by the 

decisions of the California Supreme Court, ‘including reasoned dicta.’” Id. at 1284 

(quoting Muniz v. United Parcel Serv., Inc., 738 F.3d 214, 219 (9th Cir. 2013)). “We 

generally will ‘follow a published intermediate state court decision regarding California 

law unless we are convinced that the California Supreme Court would reject it.’” Id.

(quoting Muniz, 738 F.3d at 219).

A contract to arbitrate will not be inferred absent a “clear agreement.” Davis v. 

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Nordstrom, Inc., 755 F.3d 1089, 1092 (9th Cir. 2014) (quoting Avery v. Integrated 

Healthcare Holdings, Inc., 218 Cal. App. 4th 50, 59 (2013)). A “clear agreement” to 

arbitrate may be either express or implied in fact. Davis, 755 F.3d at 1093.

In California, “mutual consent is gathered from the reasonable meaning of the 

words and acts of the parties, and not from their unexpressed intentions or 

understanding.” Reigelsperger v. Siller, 40 Cal. 4th 574, 579–80 (2007) (quoting 1 

Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 116, p. 155). “[T]he terms of a 

contract ordinarily are to be determined by an external, not an internal, standard; the 

outward manifestation or expression of assent is the controlling factor.” Windsor Mills, 

Inc. v. Collins & Aikman Corp., 25 Cal. App. 3d 987, 992 (1972). “Although mutual 

consent is a question of fact, whether a certain or undisputed state of facts establishes a 

contract is a question of law for the court.” Deleon v. Verizon Wireless, LLC, 207 Cal. 

App. 4th 800, 813 (2012).

As a general rule, “silence or inaction does not constitute acceptance of an 

offer. . . . There are exceptions to this rule, however. . . . An offeree’s silence may . . . be 

treated as consent to a contract when the party retains the benefit offered.” Norcia, 845 

F.3d at 1284 (quoting Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 Cal. App. 4th 1372, 

1385 (1993)). “Even if there is an applicable exception to the general rule that silence 

does not constitute acceptance, courts have rejected the argument that an offeree’s 

silence constitutes consent to a contract when the offeree reasonably did not know that 

an offer had been made.” Norcia, 845 F.3d at 1285. “[A]n offeree, regardless of 

apparent manifestation of his consent, is not bound by inconspicuous contractual 

provisions of which he was unaware, contained in a document whose contractual nature 

is not obvious.” Windsor Mills, 25 Cal. App. 3d at 993.

However, when an offer is accepted, “[a] party who is bound by a contract is

bound by all its terms, whether or not the party was aware of them. ‘A party cannot avoid

the terms of a contract on the ground that he or she failed to read it before signing.’” 

Norcia, 845 F.3d at 1284 (quoting Marin Storage & Trucking, Inc. v. Benco Contracting & 

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Eng’g, Inc., 89 Cal. App. 4th 1042, 1049 (2001)); accord Pinnacle Museum, 55 Cal. 4th at 

236 (“An arbitration clause within a contract may be binding on a party even if the party 

never actually read the clause.”); Windsor Mills, 25 Cal. App. 3d at 992 (“an offeree, 

knowing that an offer has been made to him but not knowing all of its terms, may be held 

to have accepted, by his conduct, whatever terms the offer contains”).

In the employment context, “acceptance of an agreement to arbitrate may be 

express . . . or implied-in-fact where . . . the employee’s continued employment 

constitutes her acceptance of an agreement proposed by her employer.” Craig v. Brown 

& Root, Inc., 84 Cal. App. 4th 416, 420 (internal citations omitted); see also Bayer v. 

Neiman Marcus Holdings, Inc., 582 Fed. App’x. 711, 713 (9th Cir. 2014). “Where an 

employee continues in his or her employment after being given notice of the changed 

terms or conditions, he or she has accepted those new terms or conditions.” Davis, 755 

F.3d at 1093 (applying California law); see also Asmus v. Pac. Bell, 23 Cal. 4th 1, 15 

(2000) (“Plaintiffs’ continued employment constituted acceptance of the offer of the

modified unilateral contract.”). An employer need not inform an employee “that her 

continued employment after receiving the letter [containing a new policy] constituted 

acceptance of new terms of employment.” Davis, 755 F.3d at 1094 (California does not 

“require that employees must be expressly told that continued employment constitutes 

acceptance”).

Regarding employer changes to arbitration policies, courts have found that 

providing employees with reasonable notice of the policy, and an employee continuing to 

work after such notice, is sufficient to form an arbitration agreement. See Davis, 755 

F.3d at 1094 (“Nordstrom satisfied the minimal requirements under California law for 

providing employees with reasonable notice of a change to its employee handbook by 

sending a letter to Davis and other employees informing them of the modification, and not 

seeking to enforce the arbitration provision during the 30 day notice period.”); Craig, 84 

Cal. App. 4th at 420–22 (employer provided copies of its arbitration policy to the plaintiff 

employee, who never signed an acknowledgment nor otherwise expressly agreed to be 

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bound by the policy, yet because the arbitration policy was “received by Craig in 1993 

and again in 1994[, and] she continued to work for Brown & Root until 1997 . . . she 

thereby agreed to be bound by the terms”); Aquino v. Toyota Motor Sales USA, Inc., 

Case No. 15-cv-05281-JST, 2016 WL 3055897, at *4 (N.D. Cal. May 31, 2016) (“an 

implied-in-fact agreement exists between Toyota and Ms. Aquino to arbitrate the claims 

at issue” because, “[a]s in Craig, Ms. Aquino had notice of Toyota’s implementation of the 

arbitration agreement, and she continued to work for Toyota after the Agreement went 

into effect” despite the fact that “she did not sign the Agreement because she did not 

agree to it”).

In Craig, the employee (named Craig) filed a sworn declaration that she “did not 

receive any of these documents [containing the arbitration provision] at my residence in 

Baldwin Park during the years 1993 or 1994.” Craig, 84 Cal. App. 4th at 420. The court 

considered competing “declarations and documents showing that the items were mailed 

to Craig at her home address and not returned[.]” Id. at 421. Weighing the evidence, the 

court determined that Craig did in fact receive the documents mailed to her. The 

appellate court affirmed the finding of a valid arbitration agreement, finding that “there is 

substantial evidence (1) that the memorandum and brochure [containing the arbitration 

provision] were received by Craig in 1993 and again in 1994; (2) that she continued to 

work for Brown & Root until 1997; and (3) that she thereby agreed to be bound by the 

terms of the Dispute Resolution Program, including its provision for binding arbitration.” 

Id. at 422. 

In Aquino, 2016 WL 3055897, at *4, the employer Toyota sent communications 

containing the arbitration policy by email and mail such that “Aquino had notice of 

Toyota’s implementation of the arbitration agreement, and she continued to work for 

Toyota after the Agreement went into effect.” Id. Aquino argued that “she thought that 

she would have to sign the Agreement to make it effective, and that she did not sign the 

Agreement because she did not agree to it.” Id. She also argued that she never 

expressed “intentional communication of assent.” Id. But neither did she “ever attempted 

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to communicate her lack of consent to the Agreement to Toyota in any way.” Id. The 

court stated that “mutual consent is gathered from the reasonable meaning of the words 

and acts of the parties, and not from their unexpressed intentions or understanding.” Id. 

It was “undisputed that Ms. Aquino received the Agreement (at least via email), that she 

failed to opt out of it, . . . that she continued to work at Toyota after the Agreement went 

into effect,” and that she never “attempted to communicate her lack of consent to the 

Agreement to Toyota in any way.” Id. The court found that “[u]nder California law, these 

facts establish an enforceable agreement between Ms. Aquino and Toyota.” Id.

Here, the parties do not dispute that Best Buy gave Lovig notice that it was 

instituting a new arbitration policy. Prior to its implementation on March 15, 2016, Best 

Buy posted the Arbitration Policy to an intranet site that contains Best Buy Stores’ human 

resources policies, and it posted documentation and a training module explaining the 

Arbitration Policy to the same site. Sipprell Decl. ¶¶ 5–6. Plaintiff had access to those 

training materials, and he in fact knew that training about the Arbitration Policy was 

available to him as early as January 2016. Lovig Decl. ¶ 3. Although he knew how to 

access and review those materials beginning in January 2016, plaintiff elected not to 

review them. Id. ¶¶ 3–4. It is also clear that by September 2016, plaintiff actually did 

know some of the specific terms of the Arbitration Policy, including that it would “force me 

[Lovig] to quit the company or waive my [Lovig’s] right to sue[.]” Sipprell Decl., Ex. D at 2. 

These actions, and the availability of the Arbitration Policy on the intranet, were 

clearly sufficient to provide Lovig with notice of the new policy. E.g., Craig, 84 Cal. App. 

4th at 420; Aquino, 2016 WL 3055897, at *4. Lovig was presented with the Arbitration 

Policy and was given ample notice about it and its terms. The policy specifically stated 

that continued employment constituted agreement to its terms. Sipprell Decl., Ex. A at 1. 

Lovig remained employed by Best Buy over five months beyond the effective date of the 

policy without raising any objection to it.

3

 “Where an employee continues in his or her 

 

3 Notably, Lovig does not claim that he attempted to reject the Arbitration Policy any time 

prior to August 28, 2016—more than five months after the policy had gone into effect and 

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employment after being given notice of the changed terms or conditions, he or she has 

accepted those new terms or conditions.” Davis, 755 F.3d at 1093. Lovig’s continued 

employment expressed agreement to and acceptance of the Arbitration Policy, even if 

Lovig had not known that his actions constituted acceptance. Davis, 755 F.3d at 1094 

(California does not “require that employees must be expressly told that continued 

employment constitutes acceptance”). Lovig’s unexpressed intentions or understandings 

about the policy cannot negate his outward expression of assent to its terms.

2. Whether the Arbitration Policy is Valid and Enforceable

Plaintiff argues that the Arbitration Policy is unenforceable because it is illusory, 

defendants violated a covenant of good faith and fair dealing when implementing it, and it 

is unconscionable.

a. Whether It Is Illusory

“[I]f a promise is expressly made conditional on something that the parties know 

cannot occur, no real promise has been made. Similarly, one who states ‘I promise to 

render a future performance, if I want to when the time arrives,’ has made no promise at 

all. . . . Thus, an unqualified right to modify or terminate the contract is not enforceable.

But the fact that one party reserves the implied power to terminate or modify a unilateral 

contract is not fatal to its enforcement, if the exercise of the power is subject to 

limitations, such as fairness and reasonable notice.” Asmus, 23 Cal. 4th at 15–16 

(finding a contract not illusory where “the promise was not optional with the employer and 

was fully enforceable until terminated or modified”).

Plaintiff argues that defendants unilaterally imposed an arbitration policy that 

included an onerous retroactivity term. By doing so, the Arbitration Policy was illusory 

under the circumstances. Opp. at 5.

As in Asmus, 23 Cal. 4th at 15–16, the Arbitration Policy here is not illusory 

 

at least eight months after he first had notice of it. The court does not express an opinion 

about whether Lovig’s attempt to reject the Arbitration Policy would have been effective if 

made within a reasonable time following the notice.

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because its terms are not optional with Best Buy, and both Best Buy and Lovig are bound 

to the policy so long as it is in force. Best Buy remains bound by the Arbitration Policy 

with respect to plaintiff unless the parties agree otherwise. Because Best Buy has not 

reserved for itself the unfettered right to terminate or modify the policy, it is not illusory.

b. Whether It Violated the Covenant of Good Faith and Fair Dealing

“It has long been recognized in California that ‘[t]here is an implied covenant of 

good faith and fair dealing in every contract that neither party will do anything which will 

injure the right of the other to receive the benefits of the agreement.’” Kransco v. Am. 

Empire Surplus Lines Ins. Co., 23 Cal. 4th 390, 400 (2000) (quoting Comunale v. Traders 

& General Ins. Co., 50 Cal. 2d 654, 658 (1958)). 

Plaintiff argues that “defendants created an agreement and imposed retroactivity 

as a term. Such behavior is quintessentially unfair in that is modifies the existing 

employment arrangement between Plaintiff and Defendants in a manner wholly unfair, 

depriving Plaintiff of the prior rights he held.” Opp. at 7.

Plaintiff’s argument presumes that the Arbitration Policy modified the existing 

employment arrangement between the parties unfairly because it applies retroactively. 

First, plaintiff does not identify any terms of any prior employment arrangement. But this 

argument requires that the duty of good faith under a prior contract was breached by the 

Arbitration Policy. Plaintiff does not identify any terms of a prior contract that were 

frustrated by the Arbitration Policy.

Second, companies and employees can contract with each other to require 

arbitration. Such contracts are not required to be entered into on the date of an 

employee’s hire. Here, the agreement was entered into sometime after Lovig began 

working for Best Buy. In those circumstances, such an agreement will necessarily 

change the parties’ relationship. But not every such change violates the covenant of 

good faith and fair dealing of a prior contract. Parties can contract to arbitrate even past 

disputes. See, e.g., DeVries v. Experian Info. Sols., Inc., Case No. 16-cv-02953-WHO, 

2017 WL 733096, at *8 (N.D. Cal. Feb. 24, 2017); In re Verisign, Inc., Derivative Litig., 

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531 F. Supp. 2d 1173, 1223–24 (N.D. Cal. 2007).

c. Whether It Is Unconscionable

Under California law, courts may refuse to enforce any contract found “to have 

been unconscionable at the time it was made” and may “limit the application of any 

unconscionable clause.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 340 (2011). 

“The party resisting arbitration bears the burden of proving unconscionability. Both 

procedural unconscionability and substantive unconscionability must be shown, but they 

need not be present in the same degree and are evaluated on a sliding scale. The more 

substantively oppressive the contract term, the less evidence of procedural 

unconscionability is required to come to the conclusion that the term is unenforceable, 

and vice versa.” Pinnacle Museum, 55 Cal. 4th at 247 (citations and internal quotation 

marks omitted).

“To determine whether the arbitration agreement is procedurally unconscionable 

the court must examine the manner in which the contract was negotiated and the 

circumstances of the parties at that time.” Ingle v. Circuit City Stores, Inc., 328 F.3d 

1165, 1171 (9th Cir. 2003) (internal quotation marks omitted). “[P]rocedural 

unconscionability requires oppression or surprise. Oppression occurs where a contract 

involves lack of negotiation and meaningful choice[.]” Pinnacle Museum, 55 Cal. 4th at 

247 (citations and internal quotation marks omitted). “A contract is oppressive if an 

inequality of bargaining power between the parties precludes the weaker party from 

enjoying a meaningful opportunity to negotiate and choose the terms of the contract.” 

Ingle, 328 F.3d at 1171. “Surprise involves the extent to which the supposedly agreedupon terms of the bargain are hidden in the prolix printed form drafted by the party 

seeking to enforce the disputed terms.” Id.; Pinnacle Museum, 55 Cal. 4th at 247.

“Substantive unconscionability pertains to the fairness of an agreement’s actual 

terms and to assessments of whether they are overly harsh or one-sided. A contract 

term is not substantively unconscionable when it merely gives one side a greater benefit; 

rather, the term must be so one-sided as to ‘shock the conscience.” Pinnacle Museum, 

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55 Cal. 4th at 246 (citations and internal quotation marks omitted). An arbitration 

agreement must call for arbitration that “meet[s] certain minimum requirements, including 

neutrality of the arbitrator, the provision of adequate discovery, a written decision that will 

permit a limited form of judicial review, and limitations on the costs of arbitration.” Craig, 

84 Cal. App. 4th at 422; accord Wherry v. Award, Inc., 192 Cal. App. 4th 1242, 1248 

(2011) (“To be valid, at minimum the arbitration agreement must require a neutral 

arbitrator, sufficient discovery, and a written decision adequate enough to allow judicial 

review.”).

Procedurally, the Arbitration Agreement was unconscionable. It was not 

negotiated—it was presented as take-it-or-leave-it. Armendariz v. Found. Health 

Psychcare Servs., Inc., 24 Cal. 4th 83, 115 (2000) (employment contract procedurally 

unconscionable where it “was imposed on employees as a condition of employment and 

there was no opportunity to negotiate”). As such, it was oppressive because it involved

lack of negotiation or meaningful choice. Moreover, it was oppressive because the 

parties had a stark disparity in bargaining power. The employee being told to accept or 

quit precluded any meaningful opportunity to negotiate the terms of the agreement. 

Regarding surprise, there was no surprise. The terms of the agreement were not 

buried or hidden, and Best Buy brought them to plaintiff’s attention repeatedly.

Substantively, the Arbitration Agreement is not unconscionable. Plaintiff argues, 

without citation to any authority, that any arbitration agreement that applies retroactively 

is substantively unconscionable. However, that position does not accord with California 

law. See, e.g., DeVries, 2017 WL 733096, at *8 (“Courts have also consistently applied 

arbitration agreements retroactively”); In re Verisign, Inc., Derivative Litig., 531 F. Supp. 

2d at 1223–24 (N.D. Cal. 2007) (applying arbitration agreement retroactively). Plaintiff 

does not identify any other source of substantive unconscionability, nor can the court find 

any. See Craig, 84 Cal. App. 4th at 422 (arbitration requires “neutrality of the arbitrator, 

the provision of adequate discovery, a written decision that will permit a limited form of 

judicial review, and limitations on the costs of arbitration”).

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Because plaintiff must show both procedural and substantive unconscionability—

and he fails to do so—the agreement is not unconscionable, even when recognizing the 

procedural oppression and applying a sliding scale.

3. Whether the Claims at Issue Fall Within the Scope of the Agreement

The Arbitration Policy was effective March 15, 2016, by its own terms. Sipprell 

Decl. ¶ 4 & Ex. A at 1. The complaint asserts a relevant time period beginning four years 

prior to the filing of this action. FAC ¶ 13. Therefore, the current allegations concern 

time periods both before and after the Arbitration Policy was implemented. Defendants 

argue that the Arbitration Policy applies retroactively, prior to the date it was 

implemented. Plaintiff argues that the court should reject the retroactivity term, as it 

would destroy plaintiff’s rights in claims that had already accrued.

“[W]hen examining the scope of an arbitration agreement, as with any other 

contract dispute, we first look to the express terms of the parties’ agreement. If the text is 

plain and unambiguous, that is the end of our analysis in this case because we must 

rigorously enforce arbitration agreements according to their terms[.]” United States ex 

rel. Welch v. My Left Foot Children’s Therapy, LLC, 871 F.3d 791, 796 (9th Cir. 2017) 

(internal quotation marks and citations omitted). That includes language applying 

arbitration agreements retroactively, to cover disputes arising prior to the agreement 

itself. In re Verisign, Inc., Derivative Litig., 531 F. Supp. 2d at 1223–24; DeVries, 2017 

WL 733096, at *8 (“Courts have also consistently applied arbitration agreements

retroactively where the agreements . . . facially apply to disputes arising prior to the 

agreement.”); cf. Castro v. ABM Indus., Inc., Case No. 17-cv-3026-YGR, 2018 WL 

2197527, at *4 (N.D. Cal. May 14, 2018) (arbitration clause applying to “all Covered 

Claims, whenever they arise” facially applied only to present and future, but not past, 

conduct). Doubts or ambiguities must be resolved in favor of arbitration. Moses H. Cone 

Moses H. Cone Mem’l Hosp., 460 U.S. at 24–25. 

Here, the Arbitration Policy unambiguously applies to “past, present or future 

Claims between an Employee/former Employee or applicant and Best Buy, that arise out 

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of or relate in any way to the applicant’s or Employee’s employment application, 

employment and/or termination of employment with Best Buy[.]” Sipprell Decl., Ex. A at 

2. Elsewhere, the policy states that it “requires that . . . Employees bring in arbitration, 

rather than in court, any past, present or future claims, disputes, or lawsuits[.]” Id. at 1. 

The terms are clear on their face, and the Arbitration Policy applies retroactively.

B. Whether to Dismiss Plaintiff’s Class Claims

Defendants ask the court to dismiss plaintiff’s class claims, arguing that the 

Arbitration Policy contains a class and collective action waiver. Mot. at 12–13. Although 

the Arbitration Policy requires disputes about what is arbitrable to be decided in 

arbitration, that requirement “does not apply to the class and collective action waiver 

and/or representative action waiver.” Sipprell Decl., Ex. A at 6. Plaintiff’s sole objection 

to defendants’ motion to dismiss class claims is that it “depends upon the request to 

compel arbitration” and “must be denied when the motion to compel arbitration is denied.” 

Opp. at 11. As the motion to compel arbitration is granted, plaintiff raises no viable 

objection to defendants’ motion to dismiss class claims.

Because plaintiff agreed to arbitrate any and all non-PAGA claims on an individual 

basis only (Sipprell Decl., Ex. A at 4–5), plaintiff’s class claims are DISMISSED WITH

PREJUDICE.

C. Whether to Stay Proceedings Before this Court

1. Arbitrable Claims

Title 9 U.S.C. § 3 provides that “the court . . . upon being satisfied that the issue 

. . . is referable to arbitration . . . 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[.]” That provision requires that plaintiff’s arbitrable claims be stayed during 

arbitration. Kilgore v. KeyBank, Nat. Ass’n, 718 F.3d 1052, 1057 (9th Cir. 2013); 9 

U.S.C. § 3. Because the Arbitration Agreement is valid, and the dispute falls within its 

terms, the court must stay further proceedings of the arbitrable claims pending arbitration. 

Kilgore, 718 F.3d at 1057 (9 U.S.C. § 3 “require[es] stay of civil action during arbitration”).

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2. PAGA Claim

A court may stay proceedings as part of its inherent power “to control the 

disposition of the causes on its docket with economy of time and effort for itself, for 

counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). Use of this 

power “calls for the exercise of judgment, which must weigh competing interests and 

maintain an even balance.” Id. at 254–55; see also Mediterranean Enterprises, Inc. v. 

Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir. 1983) (“the district court did not abuse 

its discretion by staying the action pending receipt of the results of arbitration”). 

In determining whether it should exercise its discretion to grant a stay, the court 

should consider “the possible damage which may result from the granting of a stay, the 

hardship or inequity which a party may suffer in being required to go forward, and the 

orderly course of justice measured in terms of the simplifying or complicating of issues, 

proof, and questions of law which could be expected to result from a stay.” CMAX, Inc. v. 

Hall, 300 F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254–55).

Taking the above considerations into account, the court finds that it is appropriate 

to stay plaintiff’s PAGA claim. See, e.g., McGill v. Citibank, 2 Cal. 5th 945, 966 (2017) 

(“case law establishes that a stay of proceedings as to any inarbitrable claims is 

appropriate until arbitration of any arbitrable claims is concluded”); Franco v. Arakelian 

Enterprises, Inc., 234 Cal. App. 4th 947, 966 (2015) (compelling arbitration and staying 

PAGA claims pending arbitration); Shepardson v. Adecco USA, Inc., Case No. 15-cv05102-EMC, 2016 WL 1322994, at *6 (N.D. Cal. Apr. 5, 2016) (staying PAGA claim 

pending the outcome of arbitration of the plaintiff’s individual Labor Code claims); 

Cobarruviaz v. Maplebear, Inc., 143 F. Supp. 3d 930, 947 (N.D. Cal. 2015) (staying

PAGA claim pending outcome of arbitration of the plaintiff’s individual claims); Jacobson 

v. Snap-on Tools Co., Case No. 15-cv-02141-JD, 2015 WL 8293164, at *6 (N.D. Cal. 

Dec. 9, 2015) (same).

CONCLUSION

For the foregoing reasons, plaintiff is hereby COMPELLED TO ARBITRATE ON 

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AN INDIVIDUAL BASIS claims one through six of his First Amended Complaint for failure 

to provide meal periods; failure to provide rest periods; failure to pay hourly wages; failure 

to provide accurate written wage statements; failure to timely pay all final wages; and 

unfair competition. The entire action is hereby STAYED pending resolution of the 

arbitration. Plaintiff’s class claims are hereby DISMISSED WITH PREJUDICE.

IT IS SO ORDERED.

Dated: August 28, 2018

__________________________________

PHYLLIS J. HAMILTON

United States District Judge

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