Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02558/USCOURTS-cand-4_06-cv-02558-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:1981 Job Discrimination (Race)

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United States District Court

For the Northern District of California

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1

As Defendant notes, Plaintiff's opposition was filed on May

30, 2006, several days after her May 26, 2006 deadline. Plaintiff

did not move for an extension of time to file her opposition, as

required by Civil Local Rule 6-3, nor did she provide any

explanation for her belated filing. In addition, the form of

Plaintiff's opposition violates Local Rule 7-4(a)(2) by failing to

include a table of contents and table of authorities. 

Defendant asks the Court to strike Plaintiff's opposition as a

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CYNTHIA MCDANIELS,

Plaintiff,

v.

HOSPICE OF NAPA VALLEY, a

corporation; and DOES 1-50,

Defendants.

 /

No. C 06-2558 CW

TENTATIVE ORDER

DENYING

DEFENDANT'S

MOTION TO COMPEL

ARBITRATION AND

DENYING IN PART

DEFENDANT'S

MOTION TO DISMISS

Defendant Hospice of Napa Valley moves to stay proceedings in

this action and to compel arbitration, or in the alternative to

dismiss it under Federal Rules of Civil Procedure 12(b)(1) or

12(b)(6). Plaintiff opposes the motion. The matter was taken

under submission on the papers.1 Having considered all of the

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sanction. The Court finds that striking Plaintiff's opposition as

a sanction is unwarranted at this time. Instead, the Court will

allow Defendant, if it chooses, to file a five page surreply in

response to this tentative order to cure the shortened time it had

to file a reply. If, after receiving the surreply, the Court is

inclined to alter its proposed ruling, it will allow Plaintiff to

file a supplemental response. If Defendant chooses not to file a

surreply, this tentative order will be adopted in full. 

Plaintiff and her counsel are warned that they must abide by

the Court's deadlines and the Civil Local Rules. In the future, if

Plaintiff fails to file documents on time, without seeking an

extension as required by the Local Rules, the Court may refuse to

consider Plaintiff's late filing as a sanction. 

2

papers filed by the parties, the Court is inclined to deny

Defendant's motion to compel arbitration and deny in part

Defendant's motion to dismiss. 

BACKGROUND

Plaintiff, an African American female, worked as an

administrative assistant for Defendant from July, 1997 to July,

2005. Complaint ¶ 3. Over the course of her tenure, Plaintiff's

roles and responsibilities included serving as a receptionist,

human resources assistant, personnel records clerk and personnel

and benefits records clerk. Id. ¶¶ 24-25. She was terminated on

July 29, 2005, while on a leave of absence due to a foot injury. 

Id. ¶ 33. 

Plaintiff alleges that Defendant used a system of subjective

and arbitrary decision-making that allowed racial biases and

stereotypes to affect employment decisions, and that Defendant

intentionally discriminated against her in connection with

promotion, compensation, discipline, termination, retaliation and

harassment. Id. ¶ 9. 

Plaintiff filed this action in federal court alleging ten

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causes of action against Defendant: (1) a pattern or practice of

racial discrimination in violation of 42 U.S.C. § 1981; (2) a

pattern or practice of racial discrimination in violation of Title

VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq.;

(3) a pattern or practice of racial discrimination in violation of

California Government Code § 12940 et seq.; (4) failure to maintain

an environment free from harassment in violation of California

Government Code § 12940; (5) retaliation in violation of California

Government Code § 12940(f); (6) failure to promote in violation of

California Government Code § 12940 and 42 U.S.C. § 2000 et seq.;

(7) breach of implied contract; (8) breach of the implied covenant

of good faith and fair dealing; (9) intentional infliction of

emotional distress; and (10) negligent infliction of emotional

distress. 

Defendant's Employee Handbook sets forth the "terms and

conditions of employment for all full-time, part-time, per diem,

and temporary employees." Def.'s Ex. A, Hospice of Napa Valley,

Inc., Employee Handbook, Rev. Sept. 2001 (hereinafter Employee

Handbook), "About This Handbook" (unpaginated introductory

section). Defendant "reserve[d] the right to add, modify or delete

provisions of this Handbook or any other document, or the policies

and procedures on which they may be based, at any time, without

advance notice." Id. 

The arbitration section of the Employee Handbook provides, in

full,

Any controversy, dispute or claim (including sexual

harassment) (hereinafter 'dispute') shall be determined in

accordance with the dispute resolution procedures established

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in this paragraph and the Federal Arbitration Act. 

Any dispute will be resolved, if possible, through the

employee grievance procedure as outlined in the Employee

Handbook.

If a dispute cannot be resolved through the grievance

procedures, the disputes shall be determined by arbitration in

accordance with the arbitration procedures established in this

section and the Federal Arbitration Act. All arbitration

procedures will occur in the county in which the agency is

located.

1. The employee must initiate arbitration by providing

the agency with a written demand to arbitrate. Prior to

initiating these arbitration procedures, the employee must

have initiated and completed in a timely manner the grievance

procedure outlined in the Employee Handbook. Failure to

timely initiate and complete the grievance procedure or to

timely initiate the arbitration procedure shall be deemed a

waiver of the employee's dispute.

2. Within 21 calendar days of receipt of a written

demand to arbitrate, the parties shall select an arbitrator to

hear the dispute. In the event that the parties are unable to

agree upon an arbitrator, either party may, within 30 calendar

days of the written demand for arbitration, petition the

presiding judge of the local state trial court having

jurisdiction over the agency for an appointment of a retired

judge to serve as the arbitrator. 

3. The arbitrator will hold a hearing at which the

parties to the dispute may submit evidence, including

examining witnesses. The arbitrator may issue subpoenas to

compel the testimony of third parties and the production of

documents. However, there shall be no pre-hearing discovery. 

Testimony shall be taken under oath and the parties may not be

represented by legal counsel. 

4. The arbitrator shall issue a written decision within

21 calendar days of the conclusion of the hearing. This

decision shall be final and binding upon the parties. 

Therefore, the employee may not initiate a lawsuit or

arbitration proceeding that is in any way related to the

dispute. The decision of the arbitrator may be entered as a

judgment in a court of competent jurisdiction. The arbitrator

shall not have the authority to amend, modify, or delete any

provision of this policy or any agency policy. 

5. The fee of the arbitrator shall be split equally

between the parties. 

In the event that any paragraph, or provision within a

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2

Plaintiff also explains that she was required to sign an

earlier arbitration agreement when she first was hired by

Defendant. McDaniels Decl. ¶ 2. 

5

paragraph, of the Grievance and Arbitration Procedure is

determined to be illegal or unenforceable, such determination

shall not affect the validity or enforceability of the

remaining paragraphs, or provisions within a paragraph, all of

which shall remain in full force and effect.

Employee Handbook 7-3. On November 1, 2001, Plaintiff signed a

pre-printed acknowledgment that she had received the Employee

Handbook and that she would be subject to its terms. Def.'s Ex. B,

Hospice of Napa Valley, Inc., Employee Manual Acknowledgment. The

signed acknowledgment states, in part, 

In the event that I am dissatisfied or disagree with any

action or failure to act by Hospice of Napa Valley, Inc. or

its agents, I agree to submit the matter to the agency's

Grievance and Arbitration Procedures, which are contained in

the Handbook, for final and binding resolution.

In support of her opposition to Defendant's motion to compel

arbitration, Plaintiff declares that she "was forced to sign the

Employee manual acknowledgment form in order to continue working at

Hospice."2 McDaniels Decl. ¶ 3. She says that she "was not

offered the opportunity to opt out of the arbitration agreement nor

were any of its terms negotiable," that she "did not freely accept

the terms of the arbitration clause," and that she "only signed the

acknowledgment of receipt in order to keep [her] job." Id. ¶¶ 3,

6. Plaintiff declares, "It was common knowledge at Hospice that if

an employee refused to sign the acknowledgment of receipt then that

employee could not work at Hospice." Id. ¶ 7. 

To support its reply, Defendant submits an exhibit entitled

"Documentation of Employee Counseling Session" and signed by

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Plaintiff on December 28, 2004. The printed document summarizes an

counseling session between Plaintiff and Sandy Gilbert. Above her

signature, Plaintiff wrote by hand, "I don't agree with the account

of my statements." 

LEGAL STANDARDS

I. Motion to Compel Arbitration

Under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq.,

written agreements that controversies between the parties shall be

settled by arbitration are “valid, irrevocable, and enforceable,

save on such grounds as exist in law or at equity for revocation of

any contract.” 9 U.S.C. § 2. A party aggrieved by the refusal of

another to arbitrate under a written arbitration agreement may

petition the district court in which an action has been commenced

for an order directing that arbitration proceed as provided for in

the agreement. 9 U.S.C. § 4. If the court is satisfied “that the

making of the arbitration agreement or the failure to comply with

the agreement is not in issue, the court shall make an order

directing the parties to proceed to arbitration in accordance with

the terms of the agreement.” Id. The FAA reflects a "liberal

federal policy favoring arbitration agreements." Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (quoting

Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24

(1983)). 

Arbitration agreements properly formed in connection with

contracts of employment are covered by the FAA and therefore are

generally valid and enforceable unless the employee is a

transportation worker. 9 U.S.C. § 1; Circuit City Stores v. Adams,

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532 U.S. 105, 119 (2001). 

II. Motion to Dismiss

A motion to dismiss for failure to state a claim will be

denied unless it is “clear that no relief could be granted under

any set of facts that could be proved consistent with the

allegations.” Falkowski v. Imation Corp., 309 F.3d 1123, 1132 (9th

Cir. 2002), citing Swierkiewicz v. Sorema N.A., 534 U.S. 506

(2002). All material allegations in the complaint will be taken as

true and construed in the light most favorable to the plaintiff. 

NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). 

Although the court is generally confined to consideration of the

allegations in the pleadings, when the complaint is accompanied by

attached documents, such documents are deemed part of the complaint

and may be considered in evaluating the merits of a Rule 12(b)(6)

motion. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th

Cir. 1987).

When granting a motion to dismiss, a court is generally

required to grant a plaintiff leave to amend, even if no request to

amend the pleading was made, unless amendment would be futile. 

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

F.2d 242, 246-47 (9th Cir. 1990). In determining whether amendment

would be futile, a court examines whether the complaint could be

amended to cure the defect requiring dismissal “without

contradicting any of the allegations of [the] original complaint.” 

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). 

Leave to amend should be liberally granted, but an amended

complaint cannot allege facts inconsistent with the challenged

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pleading. Id. at 296-97. 

DISCUSSION

I. Motion to Compel Arbitration

Defendant moves to compel arbitration in accordance with the

FAA and the arbitration provision of the Employee Handbook. 

Plaintiff opposes the motion on the ground that the arbitration

provision is unenforceable because it is procedurally and

substantively unconscionable. 

A. Applicable Law

In determining whether an agreement to arbitrate is valid,

federal courts must "apply ordinary state-law principles that

govern the formation of contracts." Circuit City Stores v. Adams,

279 F.3d 889, 892 (9th Cir. 2002) (quoting First Options of

Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)), cert. den., 535

U.S. 1112. "General contract defenses such as fraud, duress or

unconscionability, grounded in state contract law, may operate to

invalidate arbitration agreements." Id. (citing Doctor's Assocs.,

Inc. v. Casarotto, 517 U.S. 681, 687 (1996)); see also Ticknor v.

Choice Hotels Int'l, Inc., 265 F.3d 931 (9th Cir. 2001) (applying

Montana contract law to determine validity of arbitration

agreement). “If the court as a matter of law finds the contract or

any clause of the contract to have been unconscionable at the time

it was made the court may refuse to enforce the contract . . .” 

Cal. Civ. Code § 1670.5(a). 

Under California law, unconscionability has both a procedural

and a substantive component. Although both procedural and

substantive unconscionability must be present before a court will

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refuse to enforce a contract, they need not be present to the same

degree; "the more substantively oppressive the contract terms, the

less evidence of procedural unconscionability is required to come

to the conclusion that the term is unenforceable, and vice versa." 

Armendariz v. Found. Health Psychcare Servs., 24 Cal. 4th 83, 114

(2000).

The procedural element focuses on two factors: 

oppression and surprise. Oppression arises from 

an inequality of bargaining power which results 

in no real negotiation and an absence of 

meaningful choice. 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. 

Ellis v. McKinnon Broad. Co., 18 Cal. App. 4th 1796, 1803 (1993)

(internal citations omitted); see also American Software, Inc. v.

Ali, 46 Cal. App. 4th 1386, 1390 (1996) ("Indicia of procedural

unconscionability include oppression . . . and surprise . . .").

A contract or clause is procedurally unconscionable if it is a

contract of adhesion. Circuit City Stores v. Adams, 279 F.3d at

893 ("The [arbitration agreement] is procedurally unconscionable

because it is a contract of adhesion."); see also Flores v.

Transamerica Homefirst, Inc., 93 Cal. App. 4th 846, 853 (2002) ("A

finding of a contract of adhesion is essentially a finding of

procedural unconscionability."). A contract of adhesion is a

"standardized contract, which, imposed and drafted by the party of

superior bargaining strength, relegates to the subscribing party

only the opportunity to adhere to the contract or reject it." 

Armendariz, 24 Cal. 4th at 113 (quoting Neal v. State Farm Ins.

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Co., 188 Cal. App. 2d 690, 694 (1961)). 

In Armendariz, the California Supreme Court found an

arbitration contract to be procedurally unconscionable because

“[i]t was imposed on employees as a condition of employment and

there was no opportunity to negotiate.” 24 Cal. 4th at 114-15. 

The court explained that “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 employee and necessary employment, and few employees are in a

position to refuse a job because of an arbitration requirement.” 

Id.

Substantive unconscionability focuses on the harshness and

one-sided nature of the substantive terms of the contract. A & M

Produce Co. v. FMC Corp., 135 Cal. App. 3d 473, 486-87 (1982). An

adhesive agreement to arbitrate will satisfy this general standard

for substantive unconscionability if the agreement lacks a “modicum

of bilaterality.” Armendariz, 24 Cal. 4th at 117. Whether an

arbitration agreement is sufficiently bilateral is determined by an

examination of the actual effects of the challenged provisions. 

Ellis, 18 Cal. App. 4th at 1803-04 (“substantive unconscionability

. . . refers to an overly harsh allocation of risks or costs which

is not justified by the circumstances under which the contract was

made.”)

In addition, an employment agreement that requires the

arbitration of unwaivable statutory claims is lawful only if it

meets the following five “minimum requirements”: 

(1) provides for neutral arbitrators, (2) provides for more

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3Defendant suggests that "an arbitration procedure passes

muster under Armendariz" if it meets these five minimum

requirements. Def.'s Reply at 3. This statement mischaracterizes

Armendariz, where the California Supreme Court, after evaluating

the five minimum requirements applicable to mandatory employment

arbitration agreements, went on to address other more general

issues that also "fall under the rubric of unconscionability." 24

Cal. 4th at 113. 

11

than minimal discovery, (3) requires a written award,

(4) provides for all of the types of relief that would

otherwise be available in court, and (5) does not require

employees to pay either unreasonable costs or any arbitrators'

fees or expenses as a condition of access to the arbitration

forum. 

Armendariz, 24 Cal. 4th at 102 (quoting Cole v. Breuns Intern. Sec.

Serv., 105 F.3d 1465, 1482 (D.C. Cir. 1997)).3

B. Analysis

1. Procedural Unconscionability

Plaintiff declares that she had no opportunity to negotiate

the arbitration provision of the Employee Handbook, and that she

was forced to sign the Employee Manual Acknowledgment form in order

to remain at her job. Defendant argues that Plaintiff's

handwritten note on the "Documentation of Employee Counseling

Session" form shows that Plaintiff was "not shy" about expressing

her opinions to Defendant. However, Defendant fails to rebut

Plaintiff's claim that she had no opportunity to negotiate the

arbitration procedures in the Employee Handbook, in particular, and

that signing the acknowledgment was a condition of employment. Cf.

Circuit City Stores, Inc. v. Najd, 294 F.3d 1104, 1108 (9th Cir.

2002) (holding arbitration agreement not procedurally

unconscionable under California law where employee was offered

opportunity to opt-out, and declined). Based on the facts

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presented by Plaintiff, the Court finds that the arbitration

agreement falls within the Armendariz definition of a procedurally

unconscionable contract.

2. Substantive Unconscionability

As Defendant notes, a contract that is procedurally

unconscionable may still be enforceable if it is not also

substantively unconscionable. 

Here, the Court finds that the arbitration agreement is

substantively unconscionable based on several factors. The

Employee Handbook expressly disallows any discovery prior to the

arbitration hearing. It grants Defendant the unilateral power to

"add, modify or delete" provisions, including the arbitration

provision, "at any time, without advance notice." Moreover,

nothing in the Employee Handbook prohibits Defendant from amending

or terminating arbitration procedures even once an employee has

initiated a grievance. Defendant argues that this unilateral power

is irrelevant because it did not exercise its power to modify or

delete the arbitration provision. However, an evaluation of

whether a contract of adhesion is unconscionable "turns not only on

a 'one-sided' result, but also on an absence of 'justification' for

it." Armendariz, 24 Cal. 4th at 117 (quoting A & M Produce, 135

Cal. App. 3d at 487). By allowing itself, but not employees, to

modify or cancel the arbitration provision at any time and without

advance notice, Defendant has created an unjustified, one-sided

term. Other portions of the Employee Handbook's arbitration

provision also suggest a lack of mutuality by requiring an

employee, but not Defendant, to initiate arbitration by providing a

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4

By the same reasoning, Plaintiff's argument that the

arbitration agreement is one-sided because it applies only to

"employment related" legal disputes is unpersuasive, even if

employees are more likely to initiate employment-related grievances

than employers. 

13

written demand; and providing that employees, but not Defendant,

waive their dispute if they fail timely to initiate and complete

the grievance and arbitration procedures. Employee Handbook, 7-3

¶ 1. In addition, the arbitration procedure specifies that "the

employee [but not Defendant] may not initiate a lawsuit or

administrative proceeding that is in any way related to the

dispute." Id. ¶ 4. Although it may be the case that the drafters

did not contemplate the use of the arbitration procedure to resolve

a grievance initiated by Defendant, as the California Supreme Court

noted,

The fact that it is unlikely an employer will bring claims

against a particular type of employee is not, ultimately, a

justification for a unilateral arbitration agreement. It

provides no justification for categorically exempting employer

claims, however rare, from mandatory arbitration.4 

Armendariz, 24 Cal. 4th at 121. Defendant has offered no

justification for the unilateral aspects of its arbitration

agreement; indeed, it has denied Plaintiff's claim that the

agreement is unilateral. 

Defendant concedes that paragraph five of the Employee

Handbook's arbitration provision, which requires employees to pay

for half of the costs of arbitration, fails to meet the minimum

requirements set forth in Armendariz. Defendant asks the Court to

sever that portion of the contract. California Civil Code § 1670.5

provides,

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If the court as a matter of law finds the contract or any

clause of the contract to have been unconscionable at the time

it was made the court may refuse to enforce the contract, or

it may enforce the remainder of the contract without the

unconscionable clause, or it may so limit the application of

any unconscionable clause as to avoid any unconscionable

result. 

In exercising this discretion, courts are to consider whether the

"central purpose of the contract is tainted with illegality" or

whether any illegality is collateral. Armendariz, 24 Cal. 4th at

124. Because the Court finds that the fee-splitting is not the

only portion of the arbitration provision that is tainted with

unconscionability, and because it would effectively have to reform

the contract in order to remove the unconscionable taint (e.g., by

expanding certain terms to apply to Defendant as well as

employees), it finds that the arbitration provision of the Employee

Handbook is unenforceable in its entirety. See id. at 124-25. 

Therefore, the Court tentatively denies Defendant's motion to

compel arbitration. 

II. Motion to Dismiss

Defendant moves to dismiss under Rule 12(b)(6) Plaintiff's

federal claims, on the grounds that Plaintiff has failed to state a

claim under 42 U.S.C. § 1981, and has failed to exhaust

administrative remedies as required to bring her Title VII claim. 

The Court addresses these issues in turn. 

A. 42 U.S.C. § 1981

Title 42 U.S.C. § 1981 provides, in part, "[a]ll persons in

the United States shall have the same right in every State and

Territory to make and enforce contracts." 42 U.S.C. § 1981(a). 

"Make and enforce contracts" is defined to include "the making,

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performance, modification, and termination of contracts, and the

enjoyment of all benefits, privileges, terms, and conditions of the

contractual relationship." Id. § 1981(b). 

Defendant argues that because Plaintiff fails to allege the

existence of an employment contract for a definite period of time,

she was an at-will employee under California law, and thus cannot

state a claim for relief under § 1981. Plaintiff maintains that a

cause of action under § 1981 is available even though she was an

at-will employee. 

The parties agree that there is no Ninth Circuit binding

authority on this question. See Johnson v. Kahi Mohala Hosp.,

Inc., 1999 WL 362970 (9th Cir. May 28, 1999) (affirming grant of

summary judgment on § 1981 claim for at-will employee "even if we

were to decide that at-will employment is actionable under this

statute"). 

Defendant urges the Court adopt the reasoning in Gonzalez v.

Ingersoll Milling Mach. Co., 133 F.3d 1025, 1034-35 (7th Cir.

1998), where the Seventh Circuit suggested in dicta that the

plaintiff's at-will employment status did not provide adequate

support for her § 1981 claim. Defendant then claims that there is

a "clear circuit split" on this issue. Def.'s Reply at 7. 

Having reviewed the relevant case law, the Court finds no

evidence of a circuit split. In 2000, the Second Circuit decided

that it would "join the emerging consensus of the district courts

in this circuit, and the other circuit courts of appeal that have

squarely addressed this issue, to hold that an at-will employee may

sue under § 1981 for racially discriminatory termination." Lauture

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The Court notes that Defendant's initial citation to

Gonzalez, without acknowledging the cited dicta's subsequent

abrogation by Walker, misstates Seventh Circuit authority, and

reflects either a failure to investigate the relevant law or a

failure to meet Defendant's duty to the Court correctly to state

the law. 

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v. Int'l Bus. Machs. Corp., 216 F.3d 258, 260 (2nd Cir. 2000)

(citing, inter alia, Perry v. Woodward, 199 F.3d 1126, 1133 (10th

Cir. 1999), cert. den., 529 U.S. 1110 (2000); Spriggs v. Diamond

Auto Glass, 165 F.3d 1015, 1018-19 (4th Cir. 1999); Fadeyi v.

Planned Parenthood Ass'n of Lubbock, Inc., 160 F.3d 1048, 1051-52

(5th Cir. 1998), reh. and suggestion for reh. en banc den., Dec. 7,

1998); see also Skinner v. Maritz, Inc., 253 F.3d 337, 342 (8th

Cir. 2001) (holding that an employer may not violate § 1981 by

discharging an at-will employee for a racially discriminatory

reason). Indeed, since deciding Gonzalez in 1998, the Seventh

Circuit itself has held that an at-will employee could state a

claim under § 1981. Walker v. Abbott Labs., 340 F.3d 471, 478 (7th

Cir. 2003). The court noted that its statements in Gonzalez

regarding the applicability of § 1981 to at-will employees were

"plainly dicta," and reasoned,

we find it difficult to believe that Congress would have

sought to exclude from § 1981's protections the large portion

of the employees in this country who work under at-will

employment contracts. As other courts have noted, excluding

at-will employees from § 1981 protection 'would be to allow

use of the ubiquitous at-will doctrine as leverage to incite

violations of our state and federal laws.'

Id. at 477 (quoting in part Fadeyi, 160 F.3d at 1052).5

 

In its reply, Defendant offers no persuasive reason why the

Ninth Circuit would not follow the holdings of its sister circuits. 

It is true that the Ninth Circuit has held that under Washington

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State law, a public employee's job description did "not create

contractual expectancies," and therefore the public employer's

alleged violation of the job description was not actionable under

§ 1981. Judie v. Hamilton, 872 F.2d 919, 923 (9th Cir. 1989); see

also Barefield v. Cal. State Univ. Bakersfield, 2006 WL 829122

(E.D. Cal. Mar. 28, 2006) (finding California State employment to

be statutory and that State employee therefore could not state a

claim under § 1981). However, the Court sees no reason to apply

Judie to preclude Plaintiff, who was not a public employee, from

stating a claim under § 1981. See Walker, 340 F.3d at 476 (noting

that under the Restatement's definition of a contract, at-will

employment creates a contract because the employer promises to pay

the employee for certain work). 

Therefore, the Court tentatively denies Defendant's motion to

dismiss Plaintiff's § 1981 claim. Defendant's motion to dismiss

the entire complaint for lack of subject matter jurisdiction, based

on Plaintiff's alleged failure to state a federal claim, is

likewise tentatively denied. 

B. Exhaustion of Administrative Remedies

Before bringing an employment discrimination action under

Title VII, an employee must first exhaust administrative remedies

by filing a complaint with the Equal Employment Opportunity

Commission (EEOC). 42 U.S.C. § 2000e-5; Brown v. General Servs.

Admin., 425 U.S. 820, 832-33 (1976); Stache v. Int'l Union of

Bricklayers and Allied Craftsman, AFL-CIO, 852 F.2d 1231, 1233 (9th

Cir. 1988). "[S]ubstantial compliance with the presentment of

discrimination complaints to an appropriate administrative agency"

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is a prerequisite to the district court's exercise of jurisdiction

over a plaintiff's Title VII claims. Sommatino v. United States,

255 F.3d 704, 708 (9th Cir. 2001). 

Plaintiff does not allege in her complaint any exhaustion of

administrative remedies. With her opposition, however, she submits

copies of an administrative complaint filed with California's

Department of Fair Employment and Housing (DFEH) and a DFEH rightto-sue letter. McCoy Decl. Exs. B and C. Plaintiff does not show

that the filing of a DFEH complaint fulfills the requirements of 42

U.S.C. § 2000e-5. See Roman v. County of Los Angeles, 85 Cal. App.

4th 316, 102 (2000) (finding that exhaustion of State

administrative remedies does not fulfill exhaustion requirement for

federal claim); cf. 29 C.F.R. § 1626.10(c) (providing that charges

under the Age Discrimination in Employment Act received by one

agency under worksharing agreement shall be deemed received by the

other agency). 

The Court therefore grants Defendant's motion to dismiss

Plaintiff's Title VII claim. Plaintiff is granted leave to amend

to allege, if she can do so truthfully and without contradicting

the original complaint, that she has substantially complied with

the exhaustion requirement of 42 U.S.C. § 2000e-5.

CONCLUSION

For the foregoing reasons, the Court is inclined to DENY

Defendant's motion to compel arbitration and DENY its motion to

dismiss Plaintiff's 42 U.S.C. § 1981 claim (Docket No. 4). 

Defendant may file a surreply of no more than five pages within one

week from the date of this order. If Defendant does not do so, the

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tentative order will be adopted in full. 

The Court GRANTS the motion to dismiss with respect to

Plaintiff's Title VII claim, with leave to file, within two weeks

from the date of this order, an amended complaint in accordance

with the instructions above. 

IT IS SO ORDERED.

Dated: 7/19/06 

CLAUDIA WILKEN

United States District Judge

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