Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-03241/USCOURTS-cand-3_14-cv-03241-0/pdf.json

Nature of Suit Code: 751
Nature of Suit: Labor - Family and Medical Leave Act
Cause of Action: 28:1441 Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

YVETTE ASSI,

Plaintiff,

v.

CITIBANK NATIONAL ASSOCIATION,

Defendant.

Case No. 14-cv-03241-JD 

ORDER GRANTING MOTION TO 

COMPEL ARBITRATION AND 

DENYING SANCTIONS

Re: Dkt. Nos. 17, 18

INTRODUCTION

Yvette Assi, a former Citibank (“Citi”) employee, filed suit after being discharged in May 

2013. Despite agreeing to Citi’s dispute arbitration policy when she was hired, Assi now seeks to 

litigate her employment claims in this Court on the ground that the Citi policy is unconscionable

and unenforceable. This district has reviewed the Citi arbitration agreement in other cases and 

found it enforceable. This Court agrees and orders the case to arbitration. Citi’s request for 

sanctions is denied.

BACKGROUND

The record before the Court is replete with facts showing Assi’s consent to arbitration. 

When Assi initialed all pages and signed her employment offer with Citi on January 19, 2012, she 

agreed that any “controversy or dispute relating to [her] employment with or separation from Citi” 

would be subject to Citi’s arbitration policy. Dkt. No. 17, Exs. A, B. She again agreed to be 

bound by this policy when she signed her Dual Offer Agreement and the Principles of 

Employment. Id. at Exs. B, C. She also initialed the pages containing the arbitration provisions. 

Id. at Exs. A, B, C. In addition, Assi completed an employment application, which required her to 

acknowledge that she understood that Citi had an employment arbitration policy described in the 

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Employee Handbook and the Principles of Employment. Id. at Ex. D. She acknowledged 

receiving the handbook and a copy of the policy. Id. at Ex. E. 

The Citi policy requires employment-related disputes to be conducted under the 

Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”), as 

modified and expanded by Citi. Id. at Ex. G. The applicable rules are laid out in the policy itself. 

Id. The policy also states that if the rules are in conflict with AAA’s rules at the time of filing an 

arbitration action, AAA rules prevail. Id. 

After Assi was discharged from Citi in May 2013, she filed suit in the San Francisco 

County Superior Court. Dkt. No. 17, Ex. 1. Citi removed the case to federal court and demanded 

arbitration, but Assi refused. Id. This motion to compel arbitration and the motion for sanctions

followed. Dkt. Nos. 17, 18. 

DISCUSSION

I. MOTION TO COMPEL ARBITRATION

A. Legal Standard

Defendant’s motion to compel arbitration is governed by the Federal Arbitration Act 

(“FAA”). The FAA’s “overarching purpose . . . is to ensure the enforcement of arbitration 

agreements according to their terms so as to facilitate informal, streamlined proceedings.” AT&T 

Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1748 (2011). “Agreements to arbitrate that fall 

within the scope and coverage of the Federal Arbitration Act . . . must be enforced in state and 

federal courts.” KPMG LLP v. Cocchi, 132 S. Ct. 23, 24 (2011). A district 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. Lifescan, Inc. v. Premier Diabetic 

Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). If the district court determines that a valid 

arbitration agreement encompasses the dispute, then the FAA requires the court to enforce the 

arbitration agreement in accordance with its terms. Id. 

B. Unconscionability

Plaintiff does not dispute that an arbitration agreement exists and that it encompasses 

Assi’s claims. The parties diverge with respect to the validity of the agreement. Specifically, 

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plaintiff contends that the agreement is invalid because it is unconscionable.

Well-established precedent resolves this issue against Assi. To determine whether a valid, 

enforceable arbitration agreement exists, a district court must look to state law. Lowden v. T–

Mobile USA, Inc., 512 F.3d 1213, 1217 (9th Cir. 2008) (“We apply state-law principles that 

govern the formation of contracts to determine whether a valid arbitration agreement exists.”). A

court may consider “generally applicable contract defenses, such as fraud, duress, or 

unconscionability . . . without contravening § 2 [of the FAA].” Doctor’s Assocs. Inc., v. 

Casarotto, 517 U.S. 681, 687 (1996). Here, both parties have briefed and argued the issues solely 

under California law. Accordingly, this order will take California law as controlling, just as the 

parties have done. See Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1267 (9th Cir. 2006). 

To be deemed unenforceable under California law, an arbitration agreement must be both 

procedurally and substantively unconscionable. See Armendariz v. Found. Health Psychcare 

Servs., Inc., 24 Cal. 4th 83, 114 (2000). The party challenging the validity of the arbitration clause 

has the burden of proving unconscionability. Nagrampa v. Mailcoups Inc., 401 F.3d 1024, 1027 

(9th Cir. 2005). The inquiry into procedural validity focuses on “oppression or surprise due to 

unequal bargaining power,” while the substantive inquiry focuses on “overly harsh or one-sided 

results.” Id. (internal quotation marks omitted). The validity of an agreement is judged 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.” Id.

1. Substantive Unconscionability

Substantive unconscionability turns on the harshness or one-sided nature of the substantive 

terms of the contract. Abramson v. Juniper Networks, Inc., 115 Cal. App. 4th 638, 658 (2004). 

Assi relies heavily on a Ninth Circuit holding that: 

under California law, a contract to arbitrate between an employer 

and an employee . . . raises a rebuttable presumption of substantive 

unconscionability. Unless the employer can demonstrate that the 

effect of a contract to arbitrate is bilateral -- as is required under 

California law -- with respect to a particular employee, courts should 

presume such contracts substantively unconscionable.

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Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1174 (9th Cir. 2003). The employer need only 

demonstrate that the agreement contains a “modicum of bilaterality” or that there is a reasonable 

justification for the agreement’s one-sidedness, based on business realities. Armendariz, 24 Cal.

4th at 117. 

The parties debate whether Ingle is still good law after the Supreme Court’s arbitration 

holdings in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), and similar decisions. The 

Court need not, and does not, decide that issue now because, giving Assi every benefit of the 

doubt about the current vitality of Ingle, the Citi policy survives review under it. As Citi argues, 

the Ingle presumption is not triggered when “the employer can demonstrate that the effect of a 

contract to arbitrate is bilateral,” which Citi has successfully done here. Ingle, 328 F.3d at 1174. 

Assi claims the policy only requires employees, but not the employer, to submit disputes to 

arbitration. Dkt. No. 19 at 11. That is incorrect. The policy’s language can “reasonably be 

construed as including disputes that Citibank might have with an employee.” Dittenhafer v. 

Citigroup, No. C 10-1779 PJH, 2010 WL 3063127, at *5-6 (N.D. Cal. Aug 2, 2010). The 

Employment Application states that “the employment arbitration policy is a mutual agreement,” 

the Principles of Employment provide that in the event of a dispute “we both agree to submit the 

dispute . . . to binding arbitration,” and the Employee Handbook provides that no provision 

constitutes a waiver “of Citi’s or your right to compel arbitration of employment-related disputes.” 

Dkt. No. 17, Exs. D, B, F. The policy itself provides that arbitration is the required and exclusive 

forum for “all disputes” that arise between an employee or former employee and Citi, and that 

nothing in the policy shall prevent “either party from seeking injunctive relief in aid of 

arbitration.” Id. at Ex. G. The policy clearly requires both employees and employer to submit 

disputes to arbitration, and consequently it is not presumptively unconscionable. 

Assi also argues that Rule 23(e) of the arbitration policy is substantively unconscionable 

because it allocates arbitration costs to the plaintiff in violation of California law. Rule 23(e) 

states: “The allocation of expenses as provided for in ‘a’ through ‘d’ may not be disturbed by the 

arbitrator except where the arbitrator determines that a party’s claims were frivolous or were 

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asserted in bad faith.”1 Dkt. No. 17, Ex. H. Under California law, “when an employer imposes 

mandatory arbitration as a condition of employment, the arbitration agreement or arbitration 

process cannot generally require the employee to bear any type of expense that the employee 

would not be required to bear if he or she were free to bring the action in court.” Armendariz, 24 

Cal. 4th at 110–11. But the fee-shifting provision in the agreement is not unlike the rules and 

statutes that permit the imposition of costs and fees in judicial proceedings. “Indeed, state and 

federal courts have similar power to engage in ‘fee shifting’ to punish such bad-faith conduct.” 

Valle v. Lowe’s HIW, Inc., No. 11-1489 SC, 2011 WL 3667441, at *6 (N.D. Cal. Aug. 22, 2011) 

(finding JAMS rule in arbitration agreement allowing arbitrator to sanction parties for binging bad 

faith or unreasonable actions not substantively unconscionable). Plaintiff has failed to address 

whether awarding arbitration fees for frivolous or bad faith claims is unconscionable, and 

therefore cannot evade arbitration on this ground. 

Lastly, plaintiff argues that Rule 19 of the agreement, which requires the arbitrator to be 

governed by applicable local, state and federal law, as well as applicable Citi policies and 

procedures, is so one-sided as to be substantively unconscionable. Dkt. No. 19 at 7. Contrary to 

plaintiff’s assertion, allowing the arbitrator to be governed by applicable Citi policies and 

procedures does not infer that an arbitrator would be bound by those policies if they conflicted 

with applicable law. Rule 19 does not prevent the arbitrator from evaluating the legality of 

Citibank’s actions and is not so one-sided as to be unconscionable. 

Two other Northern District courts have found this precise arbitration policy is not

substantively unconscionable, and this Court agrees. See Dittenhafer, 2010 WL 3063127, at *5-6; 

Edwards v. Metro. Life Ins. Co., No. C 10-03755 CRB, 2010 WL 5059553, at *5 (N.D. Cal. Dec. 

6, 2010). 

2. Procedural Unconscionability

An agreement is procedurally unconscionable where it is “a standardized contract, drafted 

by the party of superior bargaining strength, that relegates to the subscribing party only the 

 1 The expenses provided for in “a” through “d” include filing fees, hearing fees and arbitrator fees, 

postponement/cancellation fees and other expenses such as the arbitrator’s travel expenses. 

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opportunity to adhere to the contract or reject it.” See Ting v. AT&T, 319 F.3d 1126, 1148 (9th 

Cir. 2003). Citibank does not dispute that the contract here is procedurally unconscionable: it is a 

contract of adhesion, as “it was imposed on employees as a condition of employment and there 

was no opportunity to negotiate.” Armendariz, 24 Cal. 4th at 114-15. However, that alone is not 

sufficient to render the entire provision unconscionable. As noted above, some degree of 

procedural unconscionability is allowed where, as in this case, the Court finds no substantive 

unconscionability. 

Plaintiff argues that defendant’s failure “to provide a copy of the controlling arbitration 

rules [] also supports a finding of procedural unconscionability.” Dkt. No. 19 at 13. The 

arbitration policy did not append a copy of the governing arbitration rules -- in this case the 

American Arbitration Association (“AAA”) rules -- because the rules were explicitly included in 

the policy itself, which plaintiff not only received, but signed. Dkt. No. 17, Ex. G. Citi “modified 

and expanded” the AAA rules and procedures, and detailed the 28 modified version within the 

policy. So plaintiff cannot accurately claim she was not provided a copy of the controlling rules. 

Finally, plaintiff alleges procedurally unconscionable “surprise” because the arbitration 

clause was allegedly “buried” in the agreements. Dkt. No. 19 at 13. This effort to escape 

enforcement is completely unsupported by the evidence. Plaintiff signed or initialed six different 

documents acknowledging her understanding that any and all disputes related to her employment 

were subject to the arbitration agreement. These included her offer letter and the dualemployment agreement (which both included notice of the arbitration agreement under clearly 

labeled, bold and underlined headings), the principles of employment (a short 2-page form 

containing a description of the arbitration agreement), an employment application (requiring a 

signature on a page stating: “I understand that Citi has adopted . . . an employment arbitration 

policy, described in applicable employee handbooks and in the Principles of Employment, which 

requires me to submit any and all disputes related to my employment or the termination of my 

employment to binding arbitration”), the Employee Handbook Receipt Form (which references the 

arbitration policy), and the actual arbitration policy itself. Dkt. No. 17, Exs. A-E, G. There is no 

element of surprise in this arbitration agreement.

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Plaintiff has failed to establish that the arbitration agreement is in any way unconscionable. 

Consequently, the Court finds it is valid and enforceable, and that Assi’s claims against Citi must 

be resolved in arbitration and not before this Court. 

II. MOTION FOR SANCTIONS

Defendant’s motion for sanctions against plaintiff and her counsel for refusal to arbitrate is

denied. Each party will bear its own costs. 

CONCLUSION

The motion to compel arbitration is granted and the case is dismissed. 

IT IS SO ORDERED.

Dated: January 13, 2015

______________________________________

JAMES DONATO

United States District Judge

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