Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-04140/USCOURTS-cand-3_04-cv-04140-6/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:1981 Civil Rights

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MOHAMED S ALI, et al,

Plaintiffs,

v

WHITE CAP INDUSTRIES, INC, et al,

Defendants. /

No C-04-4140 VRW

ORDER

On September 29, 2004, plaintiffs Mohamed S Ali (“Ali”),

and Abraham Morales (“Morales”) sued their employer, White Cap

Industries, Inc (“White Cap”) on various California wage and hour

claims. Doc #1. Ali also sued both White Cap and Ali’s

supervisors, Arturo Rodriguez (“Rodriguez”) and Hugo Fabbri

(“Fabbri”) for, inter alia, national origin, religion and race

discrimination under Title VII of the Civil Rights Act of 1964

(“Title VII”), 42 USC § 1981 (“§ 1981") and the California Fair

Employment and Housing Act (“FEHA”). Id. Plaintiffs amended their

complaint on March 15, 2005, to include a new plaintiff, Malcolm

Parks (“Parks”), who joined in the California wage and hour claims. 

Doc #14.

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 1 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

On July 5, 2005, defendants filed a notice of

substitution of counsel with the court. Doc #22. On October 21,

2005, the court entered a stipulation in which plaintiffs settled

their California wage and hour claims with defendants under FRCP

68. Doc #42. Accordingly, Morales and Parks are no longer part of

this litigation and only Ali’s discrimination-related claims

remain.

When Ali began working at White Cap, he signed an

arbitration agreement, which is at the heart of the present motion. 

Arb Agreement (Doc #30, Ex A). Defendants moved to compel

arbitration and requested a stay on August 16, 2005. Mot Arb (Doc

#29). On November 10, 2005, the court held a hearing on this

matter. For the reasons stated below, the court GRANTS defendants’

motion to compel arbitration and their request for a stay.

I

In 1925, Congress enacted the Federal Arbitration Act

(FAA) to “reverse the longstanding judicial hostility to

arbitration agreements,” to “place [such] agreements on the same

footing as other contracts” and to “manifest a liberal federal

policy favoring arbitration agreements.” EEOC Comm’n v Waffle

House, Inc, 534 US 279, 288-89 (2002). The FAA “embodies a clear

federal policy in favor of arbitration,” and “‘[a]ny doubts

concerning the scope of arbitrable issues should be resolved in

favor of arbitration.’” Simula, Inc v Autoliv, Inc, 175 F3d 716,

719 (9th Cir 1999) (quoting Moses H Cone Memorial Hospital v

Mercury Construction Corp, 460 US 1, 24-25 (1983)).

//

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 2 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

“The standard for demonstrating arbitrability is not

high,” and a district court has no discretion to hear suits that

are subject to arbitration. Id (citing Dean Witter Reynolds v

Byrd, 470 US 213, 218 (1985)). Provided that the court is

satisfied that the making of the arbitration agreement is not at

issue, the court must order arbitration pursuant to § 4 of the FAA. 

Id at 719-20. Hence, when faced with requests regarding

arbitration, the court’s sole duties are to determine whether an

arbitration agreement exists and rigorously to enforce the terms of

that agreement. Id at 720. Further, if arbitration is necessary

under such an agreement, “the court shall, on the motion of one of

the parties, stay its proceedings until ‘arbitration has been had

in accordance with the terms of the agreement.’” HIM Portland, LLC

v DeVito Builders, Inc, 317 F3d 41, 43 (1st Cir 2003) (quoting 9

USC § 3).

II

As a preliminary matter, the court notes that Ali’s

claims appear to fall directly within the scope of the arbitration

agreement. The first provision of that agreement states in

relevant part:

Any and all claims, controversies, grievances,

differences, injuries or disputes arising out of

or in any way related to Employee’s employment

with the Company, including but not limited to

demotions, promotions, transfers, assignments

and disciplinary action, up to and including

termination of Employee’s employment, claims for

breach of contract; wrongful termination;

constructive termination; age, sex, race or

other unlawful discrimination or harassment;

defamation; emotional distress; and violation of

public policy, must be submitted to final and

binding arbitration * * * . Such arbitrable

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 3 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

disputes which must be submitted to arbitration

under this Agreement include, but are not

limited to, discrimination claims arising under

state and federal anti-discrimination laws (such

as Title VII of the Civil Rights Act * * * the

California Fair Employment and Housing Act, and

the United States and California Constitution).

Arb Agreement at ¶ 1. Ali’s currently pending claims are based on

harassment and discrimination in violation of Title VII, § 1981 and

FEHA; breach of the implied covenant of good faith and fair

dealing; tortious discharge in violation of public policy and

intentional and negligent infliction of emotional distress. Doc

#14. Not only does the first provision’s broad language encompass

these claims, but most of the claims are explicitly enumerated

within the provision itself. And Ali does not dispute that these

types of claims are generally subject to arbitration.

Nonetheless, Ali has challenged the present motion to

compel on several grounds. Ali asserts that he is entitled to a

jury trial concerning the validity of the arbitration agreement and

that the arbitration agreement is unenforceable because it is

unconscionable. Opp (Doc #38) at 10-14. Ali also claims that

defendants waived their arbitration rights both by failing to

follow the procedures set forth in the arbitration agreement and by

delaying in filing a motion to compel. Id at 6-9. Finally, Ali

contends that his claims against Fabbri and Rodriguez cannot be

arbitrated because these defendants were not parties to the

arbitration agreement. Id at 9-10. The court examines these

arguments in turn.

//

//

//

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 4 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

III

Ali contends that under 9 USC § 4, he is entitled to have

a jury determine whether the arbitration agreement is valid. Ali

misconstrues that provision. 9 USC § 4 provides in relevant part:

If the making of the arbitration agreement or

the failure, neglect, or refusal to perform the

same be in issue, the court shall proceed

summarily to the trial thereof. * * * Where such

an issue is raised, the party alleged to be in

default may * * * demand a jury trial of such

issue * * * .

Although the Ninth Circuit does not appear to have addressed this

issue, other courts have held that 9 USC § 4 mandates a jury trial

“only if there is a triable issue concerning the existence or scope

of the agreement.” Saturday Evening Post Co v Rumbleseat Press,

816 F2d 1191, 1196 (7th Cir 1987) (“It is not true that by merely

demanding a jury trial a party to an arbitration agreement can get

one.”); see also American Heritage Life Ins Co v Orr, 294 F3d 702,

710 (5th Cir 2002) (no right to jury trial when alleging that

arbitration agreements are unconscionable because that issue

relates to the enforceability rather than the “making” of the

arbitration agreements); Dillard v Merrill Lynch, Pierce, Fenner &

Smith, Inc, 961 F2d 1148, 1154 (5th Cir 1992) (“The party resisting

arbitration bears ‘the burden of showing that he is entitled to a

jury trial under § 4 of the Arbitration Act.’” (quoting Bhatia v

Johnston, 818 F2d 418, 422 (5th Cir 1987))). As described above,

there is no triable issue concerning the existence or scope of the

arbitration agreement. The agreement clearly applies to Ali’s

claims. Accordingly, 9 USC § 4 does not entitle Ali to a jury

trial on these issues.

//

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 5 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

IV

Ali also argues that the arbitration agreement is

unenforceable because it is unconscionable. “In determining the

validity of an agreement to arbitrate, federal courts ‘should apply

ordinary state law principles that govern the formation of

contracts.’ ‘Thus, generally applicable defenses, such as * * *

unconscionability, may be applied to invalidate arbitration

agreements without contravening § 2 [of the FAA].’” Ferguson v

Countrywide Credit Indus, 298 F3d 778, 782 (9th Cir 2002) (omission

and alteration in original) (citation omitted) (first quoting First

Options of Chicago, Inc v Kaplan, 514 US 938, 944 (1995)) (second

quoting Doctor’s Assocs, Inc v Casarotto, 517 US 681, 687 (1996)).

Under California law, for an arbitration agreement to be

unenforceable under the unconscionability doctrine, the agreement

must be both procedurally and substantively unconscionable. 

Armendariz v Foundation Health Psychcare Services, Inc, 24 Cal 4th

83, 114 (2000). “The procedural element of unconscionability

focuses on whether the contract is one of adhesion.” McManus v

CIBC World Markets Corp, 109 Cal App 4th 76, 87 (2003). “The

substantive element addresses the existence of overly harsh or onesided terms.” Id.

In this case, Ali argues that the arbitration agreement

is one-sided in favor of defendants and therefore is substantively

unconscionable. In particular, Ali objects to the first provision

of the agreement, which states, “Any and all claims, controversies,

grievances, differences, injuries or disputes arising out of or in

any way related to Employee’s employment with the Company * * *

must be submitted to final and binding arbitration * * *.” Arb

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 6 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

Agreement at ¶ 1 (emphasis added). Ali asserts that this provision

“obligates Ali to submit to arbitration where Ali has initiated the

proceedings, but places White Cap under no obligation to pursue any

employment-related claims it might assert against Ali in

arbitration * * *.” Opp at 13.

The court disagrees with Ali’s interpretation. As

defendants note, the term “Employee’s employment” only specifies

the types of claims the parties must arbitrate, regardless whether

Ali or White Cap is the plaintiff. Reply (Doc #41) at 12-13. In

other words, this provision creates a mutual agreement to arbitrate

—— for example, if White Cap had a breach of contract claim against

Ali arising out of Ali’s employment, the arbitration agreement

would require White Cap to arbitrate that claim. Moreover, the

California court of appeal has found that similar language

requiring arbitration of “‘[a]ll disputes arising out of

[employee’s] employment or the termination of [employee’s]

employment’ * * * creates a mutual obligation to compel [the

employer] to arbitrate any claims against the employee.” McManus,

109 Cal App 4th at 100-01. Because the arbitration agreement is

not substantively unconscionable and Ali has not challenged the

agreement’s validity on any other grounds, the court finds that the

agreement is valid.

//

//

//

//

//

//

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 7 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

V

Although the arbitration agreement is valid and

enforceable, Ali provides three reasons why defendants’ motion to

compel should nonetheless be denied. First, Ali asserts that

defendants waived their arbitration rights by not complying with

procedures set forth in the arbitration agreement. Opp at 8-9. 

Next, Ali contends that defendants waived their right to

arbitration by delaying in seeking to compel arbitration. Id at 6-

9. Finally, Ali asserts that because defendants Rodriguez and

Fabbri were not parties to the arbitration agreement, Ali’s claims

against them should not be arbitrated and should remain in this

court. Id at 9-10. Ali then asserts that his claims against White

Cap should also remain in this court, in the interest of keeping

all claims in the same forum. Id.

Before the court can evaluate Ali’s arguments, the court

must determine whether it has any power to confront these issues in

the first place. In other words, the court must determine whether

the court or an arbitrator has the power to decide these issues. 

The Supreme Court has held that an arbitrator should generally

decide procedural and substantive issues pertaining to an

arbitration agreement unless the issue involves a question of

arbitrability, which the court defines as “[t]he question whether

the parties have submitted a particular dispute to arbitration.” 

Howsam v Dean Witter Reynolds, 537 US 79, 83 (2002). Put more

simply, when dealing with an arbitration agreement, a court should

only decide issues that parties would likely expect the court to

decide —— other issues should be left to the arbitrator.

//

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 8 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

The court addresses the question of arbitrability for

each of Ali’s three arguments in turn. As will be described

presently, the court determines that an arbitrator, and not the

court, must evaluate whether defendants complied with the time

limitations set forth in the arbitration agreement. On the other

hand, the court finds that it has the power to consider the other

two issues raised by Ali: whether defendants waived their right to

arbitration by delaying in seeking to compel arbitration and

whether Ali’s claims against Rodriguez and Fabbri can be

arbitrated. Accordingly, the court addresses the latter two issues

but leaves the former issue for the arbitrator to decide.

A

In arguing that defendants waived their right to

arbitration by not following procedural rules set forth in the

arbitration agreement, Ali points to the second provision of the

agreement, which states that any claims under the agreement “shall

be reduced to writing and submitted to the other party within the

applicable statute of limitations.” Arb Agreement at ¶ 2(a). The

provision goes on to state that the parties “shall meet within

fifteen (15) days of any such written claim” and must elect to

arbitrate “within thirty (30) days of [that meeting] or the claim

is waived.” Id at ¶ 2(c)-(d).

The court should not evaluate Ali’s argument, which must

instead be considered by an arbitrator. The Supreme Court in

Howsam held that an arbitrator, and not a court, should decide

whether an arbitration claim was barred by a six-year limitations

period embedded in the arbitrator’s rules that the parties had

agreed to follow. 537 US at 85. Although the fact pattern here is

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 9 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

somewhat different —— the time limit in this case is part of the

arbitration agreement rather than in the arbitrator’s rules —— the

reasoning behind Howsam still applies. Both cases involve timelimit provisions that are “the sort of procedural prerequisite that

is presumed to be for the arbitrator.” Marie v Allied Home

Mortgage Corp, 402 F3d 1, 11 (1st Cir 2005). Moreover, deferring

to the arbitrator time-limit provisions also accords with earlier

Supreme Court precedent —— in John Wiley & Sons, Inc v Livingston,

the Court held that an arbitrator and not the court should decide

whether a party gave notice of a grievance within a four-week time

period required under arbitration. 376 US 543, 556-59 (1964). And

the First Circuit recently held that an arbitrator, not a court,

should determine whether a party satisfied a 60-day time limit in

an arbitration agreement. Marie, 402 F3d at 11. In particular,

the Marie court noted:

The arbitrator might be expected to have

comparative expertise in determining the meaning

of these sorts of contractual limitations

provisions in light of the background norms in

this employment area. And as in Wiley, consideration of this kind of procedural

provision may entangle the court in issues that

go properly to the merits of the dispute, which

are for the arbitrator.

Id. Accordingly, the court defers to the arbitrator to decide

whether defendants failed to comply with the procedural rules in

the arbitration agreement and thereby waived their right to

arbitration.

B

Ali also argues that defendants waived their right to

compel arbitration by their delay in filing this motion and

availing themselves of discovery. Before considering Ali’s

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 10 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

argument, the court must again determine whether it can decide this

issue, or instead whether the issue should be decided by an

arbitrator.

1

Prior to Howsam, district courts, and not arbitrators,

had the power to determine the issue of waiver. See Sovak v Chugai

Pharmaceutical Co, 280 F3d 1266, 1270 (9th Cir 2002). But in

Howsam, the Supreme Court stated that “the presumption is that the

arbitrator should decide ‘allegations of waiver, delay, or a like

defense to arbitrability.’” 537 US 79, 84 (2002) (quoting Moses H

Cone, 460 US at 24-25). Although this language suggests that

arbitrators and not courts should decide the waiver issue, courts

have struggled with whether this language is binding or is just

dictum. For example, the Eighth Circuit relied on Howsam’s

language to find that waiver is an issue that should be decided by

an arbitrator. Nat’l American Ins Co v Transamerica Occidental

Life Ins Co, 328 F3d 462, 466 (8th Cir 2003). On the other hand,

in Marie, the First Circuit held that “Howsam and [a subsequent

case] Green Tree did not intend to disturb the traditional rule

that waiver by conduct, at least where due to litigation-related

activity, is presumptively an issue for the court.” 402 F3d 1, 14

(1st Cir 2005).

Although the Ninth Circuit has yet to weigh in on this

issue, there are many reasons why waiver based on litigationrelated activity presumptively should be decided by the court, not

an arbitrator. First, it is unclear whether the Howsam court

intended to change the long-standing rule that courts should

determine the issue of waiver. The court noted:

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 11 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

12

[T]he Court has found the phrase ‘question of

arbitrability’ not applicable in other kinds of

general circumstance where parties would likely

expect that an arbitrator would decide the

gateway matter. * * * [T]he presumption is that

the arbitrator should decide ‘allegations of

waiver, delay, or a like defense to

arbitrability.’ Moses H Cone Memorial Hospital, 460 US at 24-25.

537 US at 84 (emphasis in original). But despite this passage’s

apparent reliance on Moses H Cone, that case never held that an

arbitrator should decide issues of waiver. Rather, Moses H Cone

stated:

The Arbitration Act establishes that, as a

matter of federal law, any doubts concerning the

scope of arbitrable issues should be resolved in

favor of arbitration, whether the problem at

hand is the construction of the contract

language itself or an allegation of waiver,

delay, or a like defense to arbitrability.

Moses H Cone, 460 US at 24-25. This passage indicates that a

decisionmaker should resolve doubts regarding an allegation of

waiver in favor of arbitration. But the passage does not state

whether the decisionmaker should be the court or the arbitrator. 

In other words, despite the Howsam court’s apparent reliance on

Moses H Cone, that case does not address the question of

arbitrability regarding issues of waiver.

Additionally, when discussing the issue of waiver, the

Howsam court relied on the Revised Uniform Arbitration Act of 2000

(“RUAA”) for the proposition that an “arbitrator shall decide

whether a condition precedent to arbitrability has been fulfilled.”

RUAA § 6(c) (Supp 2002) (quoted in Howsam, 537 US at 85). But the

RUAA also includes a comment noting that “[w]aiver is one area

where courts, rather than arbitrators, often make the decision as

to enforceability of an arbitration clause.” RUAA § 6, cmt 5 (Supp

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 12 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

2004) (quoted in Marie, 402 F3d at 13). This further suggests that

the Howsam court’s reference to waiver might have been accidental,

or at least not intended to binding.

Moreover, there are compelling policy reasons supporting

the traditional rule that waiver by conduct is an issue for courts

to decide. Judges have a comparative advantage in recognizing

abusive forum shopping, and “[w]here the alleged waiver arises out

of conduct within the very same litigation in which the party

attempts to compel arbitration or stay proceedings, then the

district court has power to control the course of proceedings

before it and to correct abuses of those proceedings.” Marie, 402

F3d at 13. Moreover, litigation-related waivers heavily implicate

“judicial procedures” that are unlikely to be intertwined with the

merits of the dispute. Id. Additionally, “allowing courts to

decide waiver issues —— at least when due to litigation-related

activity —— furthers a key purpose of the FAA: to permit speedy

resolution of disputes.” Id at 14. Accordingly, the court

concludes that this type of litigation-related waiver is an issue

for the court to determine.

2

To show that defendants waived their right to compel

arbitration, Ali must demonstrate that: (1) defendants “had

knowledge of [their] existing right to compel arbitration; (2)

[defendants] acted inconsistently with that existing right; and (3)

[plaintiffs] suffered prejudice from [defendants’] delay in moving

to compel arbitration.” Sovak v Chugai Pharmaceutical Co, 280 F3d

1266, 1270 (9th Cir 2002). Ali “bears ‘a heavy burden of proof’ in

showing these elements.” Id (quoting Britton v Co-op Banking

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 13 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

14

Group, 916 F2d 1405, 1412 (9th Cir 1990)). “Any examination of

whether the right to compel arbitration has been waived must be

conducted in light of the strong federal policy favoring

enforcement of arbitration agreements.” Fisher v A G Becker

Paribas Incorporation, 791 F2d 691, 694 (9th Cir 1986).

Here, Ali asserts that defendants cannot compel

arbitration because they filed the present motion more than 11

months after the complaint was filed and 15 months after defendants

learned that Ali would file suit. Opp at 6. Moreover, Ali

contends that defendants acted inconsistently with their

arbitration rights by substantially litigating their case in this

court. In particular, Ali states that defendants took multiple

depositions, produced and requested thousands of documents,

participated in a mediation session and resolved claims under FRCP

68. Id at 6-7.

The court does not find these arguments persuasive. The

effect of delay in this case is somewhat mitigated because

defendants’ current counsel only took over this case in July 2005

and filed the present motion the following month. More

significantly, most of defendants’ discovery was performed after

they had demanded arbitration. Prior to that date, defendants had

not taken a single deposition nor filed any motions in this case. 

Defendants’ discovery had consisted only of document requests. 

Reply at 3-4; Chammas Decl (Doc #31) at 2. Moreover, the court

cannot fault defendants for seeking discovery after filing the

present motion because they faced a discovery cutoff date of

September 30, 2005. Cf Maxum Foundations, Inc v Salus Corp, 779

F2d 974, 982 (4th Cir 1985) (“We decline to create a rule that

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 14 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

15

would require a party seeking arbitration to avoid a finding of

default by ignoring court-ordered discovery deadlines and assuming

the risk that its motion under the Federal Arbitration Act will be

unsuccessful.”). In any case, because the arbitration agreement

allowed for discovery, Arb Agreement at ¶ 4, Ali cannot claim that

he suffered prejudice because he has not shown that defendants

“availed [themselves] of discovery procedures unavailable in

arbitration, or gained a strategic advantage through [their]

discovery requests.” Patten Grading & Paving Inc v Skanska USA

Building Inc, 380 F3d 200, 207 (4th Cir 2004).

More generally, Ali has not shown that he suffers any

prejudice, other than delay, because of defendants’ motion to

compel. Although Ali suggests that his litigation strategy might

have changed had he known that this case would be arbitrated, he

never specifies how arbitration would prejudice him. And in many

cases, courts have granted motions to compel arbitration even if

the moving party has delayed longer than defendants have here. 

See, e g, Britton, 916 F2d at 1412-13 (no waiver where motion to

compel arbitration was brought more than a year after complaint was

filed). Accordingly, the court rejects the argument that

defendants waived their right to compel arbitration by delaying in

filing this motion.

C

Finally, Ali asserts that because defendants Rodriguez

and Fabbri were not parties to the arbitration agreement, Ali’s

claims against them should not be arbitrated and should remain in

this court. Once again, the court must examine whether it should

evaluate this claim or whether an arbitrator must instead do so. 

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 15 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

16

More specifically, given an arbitration agreement between an

employer and an employee, the issue is whether the court or an

arbitrator should decide whether non-signatory supervisors

(Rodriguez and Fabbri) can enforce the arbitration agreement

against the employee (Ali).

Although the Ninth Circuit apparently has not confronted

this issue post-Howsam, other courts have decided that they, rather

than an arbitrator, should decide whether a non-signatory can

enforce an arbitration agreement. Gaming World Intl v White Earth

Band of Chippewa Indians, 317 F3d 840, 852 (8th Cir 2003) (“Whether

a nonsigning party or a successor corporation is bound by an

arbitration agreement or whether a ‘particular type of controversy’

is covered by an ‘arbitration clause in a concededly binding

contract’ are examples of issues to be decided by the court.”

(quoting Howsam, 537 US at 84)); In re Currency Conversion Fee

Antitrust Litigation, 265 F Supp 2d 385, 401-03 (SDNY 2003)

(holding that non-signatory defendants to an arbitration clause

could compel arbitration with signatory plaintiffs). Moreover,

determining whether non-signatory supervisors can enforce

arbitration agreements involves issues of agency law that implicate

“the kind of narrow circumstance where contracting parties would

likely have expected a court to have decided the gateway matter.” 

Howsam, 537 US at 84. And in any event, there is no reason to

think that Howsam reversed the courts’ long-standing practice of

deciding this question of arbitrability. See, e g, Letizia v

Prudential Bache Securities, Inc, 802 F2d 1185, 1187-88 (9th Cir

1986). Accordingly, this court must determine whether Rodriguez

and Fabbri can enforce the arbitration agreement against Ali.

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 16 of 17
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

17

Turning to the merits, the court finds that arbitration

is proper for Ali’s claims against Rodriguez and Fabbri. Noting

the consensus among other circuits, the Ninth Circuit has found

that “nonsignatories of arbitration agreements may be bound by the

agreement under ordinary contract and agency principles.” Id at

1187. In particular, the court held that non-signatory defendants,

who were employees of a signatory defendant, could compel

arbitration against a signatory plaintiff. Id at 1187-88. Because

Rodriguez and Fabbri are agents of White Cap and their allegedly

unlawful actions relate to Ali’s employment, Rodriguez and Fabbri

are entitled to compel arbitration on Ali’s claims.

VI

Accordingly, because the arbitration agreement is

enforceable and covers Ali’s claims, and defendants can arbitrate

Ali’s claims under the agreement, the court GRANTS defendants’

motion to compel arbitration and their request for a stay. 

Additionally, the parties are instructed to submit not later than

April 25, 2006, a report in writing on the status of the

arbitration proceedings.

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

Case 3:04-cv-04140-VRW Document 50 Filed 01/31/06 Page 17 of 17