Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_12-cv-01349/USCOURTS-caed-2_12-cv-01349-0/pdf.json

Parties Involved:
United Healthcare Services, Inc.
Defendant
UnitedHealth Group, Inc.
Defendant
Yolanda Wilson
Plaintiff

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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

YOLANDA WILSON, 

Plaintiff, 

v. 

UNITED HEALTH GROUP, INC., a 

Minnesota Corporation; UNITED 

HEALTHCARE SERVICES, INC., a 

Minnesota Corporation; and DOES 1 

THROUGH 50, INCLUSIVE, 

Defendants. 

No. 2:12-cv-01349-MCE-JFM 

MEMORANDUM AND ORDER 

Plaintiff Yolanda Wilson (“Plaintiff” or “Wilson”) brings this action against 

Defendants UnitedHealth Group, Inc., (“UHG”) and United HealthCare Services 

(“UHCS”) (collectively referred to as “Defendants”) seeking to recover damages and an 

offer of employment under California’s Fair Employment and Housing Act (Cal. Gov. 

Code § 12900 et seq.), California’s family care and medical leave laws (Cal. Gov. Code 

§ 12945.2), California’s Labor Code (Cal. Lab. Code §§ 201, 203) and a wrongful 

termination in violation of public policy. (ECF No. 6.) On July 13, 2012, Defendants filed 

a Motion to Compel Arbitration and Stay the Action Pending Arbitration. (ECF No. 13.) 

Plaintiff filed a timely opposition on August 23, 2012. (ECF No. 16.) 

///

Case 2:12-cv-01349-MCE-AC Document 19 Filed 12/06/12 Page 1 of 11
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For the reasons stated below, the Court GRANTS Defendants’ Motion to Compel 

Arbitration and Stay the Action Pending Arbitration. 

BACKGROUND

PacifiCare Health Systems hired Plaintiff as an “Associate Executive I” in March 

2001. (Decl. of Deveri Ray, ECF No. 13-2 at 3.)1 UHG acquired PacifiCare Health 

System in March 2006. Id. UHCS is a subsidiary of UHG. Prior to PacifiCare’s 

acquisition, Plaintiff signed an electronic acknowledgement of Defendants’ arbitration 

policy (“Arbitration Agreement”) which required Plaintiff to arbitrate employment disputes 

including those related to termination. Id. 

Defendants promoted Plaintiff several times. Plaintiff began her career as an 

“Associate Executive I” and ended it as a “Network Account/Contract Manager.”2 In 

November 2010, Plaintiff requested leave to have surgery and recuperate from it. 

Plaintiff planned to return to work on January 11, 2011. On January 4, 2011, Plaintiff’s 

supervisor and Defendants’ representative, George Ligget, contacted Plaintiff to discuss 

Plaintiff’s annual evaluation. On January 18, 2011, Plaintiff informed Defendants that 

she needed to extend her medical leave until February 7, 2011. On February 1, 2011, 

Mr. Ligget contacted Plaintiff again along with Ms. Janet Lundbye, Defendants’ Director 

of Network Contracting. Ms. Lundbye informed Plaintiff that she would be terminated in 

2011 and that she did not need to return to work. Ms. Lundbye informed Plaintiff that 

Defendants intended to post a new Contract Manager position, but that the position 

required more experience than Plaintiff had earned during her tenure. 

Plaintiff applied for the new position on February 17, 2011. On March 1, 2011, 

/// 

 

1

 The Declaration of Deveri Ray is admissible under Fed. R. Evid. 803(6). 

 

2

 The factual assertions in this section are taken from Plaintiff’s First Amended Complaint (ECF 

No. 6.) For the purposes of this Motion, the Court accepts Plaintiff’s facts as true and makes all inferences 

in the light most favorable to Plaintiff. 

Case 2:12-cv-01349-MCE-AC Document 19 Filed 12/06/12 Page 2 of 11
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Defendants sent Plaintiff a letter informing her that they would not consider Plaintiff for 

the new position. On April 20, 2011, Defendants sent Plaintiff a letter stating that 

Defendants “eliminate[ed] [her] position effective April 20, 2011.” The merits of Plaintiff’s 

discrimination claims are not at issue; this Order focuses on whether Plaintiff’s claims 

are arbitrable. 

STANDARD 

The Federal Arbitration Act (“FAA”) provides that a written provision in a “contract 

evidencing a transaction involving commerce to settle by arbitration a controversy 

thereafter arising out of such contract . . . 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. Under the FAA, arbitration agreements must be “rigorously enforced.” 

Perry v. Thomas, 482 U.S. 483, 490 (1987). The FAA “leaves no place for the exercise 

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

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

signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). “[A]s 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 a construction of the contract 

language or an allegation of waiver, delay, or like defense to arbitrability.” Moses H. 

Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983); see also United 

Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83 (1960) (“An order 

to arbitrate . . . . should not be denied unless it may be said with positive assurance that 

the arbitration clause is not susceptible of an interpretation that covers the asserted 

dispute. Doubts should be resolved in favor of coverage.”) 

In determining the existence of an agreement to arbitrate, the Court looks to 

“general state-law principles of contract interpretation, while giving due regard to the 

federal policy in favor of arbitration.” 

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Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th Cir. 1996). Courts may not 

invalidate arbitration agreements under state law applicable only to arbitration contracts. 

AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1747 (2011). State courts may not 

apply traditional contractual defenses, like duress and unconscionability, in a broader or 

more stringent manner to invalidate arbitration agreements and destroy FAA’s purpose 

to “ensur[e] that private arbitration agreements are enforced according to their terms.” 

Id. at 1748 (quoting Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior 

Univ., 489 U.S. 468, 478 (1989). 

Generally, in deciding whether a dispute is subject to an arbitration agreement, a 

court must answer two questions: (1) whether the parties agreed to arbitrate, and, if so, 

(2) whether the scope of that agreement to arbitrate encompasses the claims at issue. 

Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If a 

party seeking arbitration establishes these two factors, the court must compel arbitration. 

9 U.S.C. § 4; Chiron, 207 F.3d at 1130. 

On a motion to compel arbitration, the Court applies a standard similar to the 

summary judgment standard applied under Rule 56 of the Federal Rules of Civil 

Procedure3and gives the opposing party the benefit of all reasonable doubt and 

inferences. Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004). 

ANALYSIS 

The FAA allows a party to seek a court order compelling arbitration when another 

party refuses to arbitrate. 9 U.S.C. §§ 1, 4. Defendants argue that each of Plaintiff’s ten 

employment-related claims should be arbitrated under the valid and enforceable 

Arbitration Agreement. (ECF No. 13.) 

/// 

 

3 All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless 

otherwise noted. 

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Plaintiff opposes Defendants’ motion to compel arbitration for three reasons: 

(1) Defendants’ Arbitration Agreement is not a contract, but an illusory promise; (2) no 

contract exists between Plaintiff and both UHG and UHCS; and (3) the Arbitration 

Agreement is unconscionable. (ECF No. 16.) The merits of each of Plaintiff’s 

arguments are discussed below. 

A. The Parties Entered into an Enforceable Arbitration Agreement 

The United States Supreme Court has held that “the first task of a court asked to 

compel arbitration of a dispute is to determine whether the parties agreed to arbitrate 

that dispute.” Mitsubishi Motors v. Soler Chrysler-Plymouth, 473 U.S. 614, 626 (1985); 

see also AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986) 

(“[A]rbitration is a matter of contract and a party cannot be required to submit to 

arbitration any dispute which he has not agreed to submit.”) Therefore, when one party 

disputes whether an arbitration agreement applies, the FAA requires the Court to 

determine whether an agreement to arbitrate exists before compelling arbitration under 

the agreement. Sanford v. MemberWorks, Inc., 483 F.3d 956, 962 (9th Cir. 2007). Even 

when the agreement is covered by the FAA, courts apply state contract law to determine 

whether an agreement is valid. Pokorny v. Quixtar, Inc., 601 F.3d 987, 994 (9th Cir. 

2010). 

Under California law, the right to arbitration depends on the existence of an 

agreement to arbitrate, and a party cannot be forced to arbitrate in the absence of such 

an agreement. Frederick v. First Union Secs., Inc., 100 Cal. App. 4th 694, 697 (2002). 

“The strong public policy in favor of arbitration does not extend to those who are not 

parties to an arbitration agreement, and a party cannot be compelled to arbitrate a 

dispute that he has not agreed to resolve by arbitration.” Lee v. S. Cal. Univ. for Prof'l 

Studies, 148 Cal. App. 4th 782, 786 (2007). 

/// 

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Because the existence of an arbitration agreement is a statutory prerequisite to granting 

a motion to compel arbitration, the moving party bears the burden of proving the 

agreement exists by a preponderance of the evidence. Rosenthal v. Great W. Fin. Secs. 

Corp., 14 Cal. 4th 394, 413 (1996). 

In this case, the Arbitration Agreement is enforceable despite Plaintiff’s 

arguments. First, Plaintiff argues that the Arbitration Agreement is an illusory promise 

because Defendants reserve the right to amend, modify, or terminate the policy once a 

year as long as it gives its employees 30 days’ written notice. (ECF No. 13-2 at 12.) 

While contracts require mutuality, it is not an “illusory agreement” when one party 

reserves the discretionary power to modify personnel terms with written notice because 

the party is still required to act fairly and in good faith. 24 Hour Fitness, Inc. v. Super. 

Ct., 66 Cal. App. 4th 1199, 1214 (1998). Plaintiff does not allege that Defendants 

altered the Arbitration Agreement in bad faith or in any unfair manner. Thus, the 

amendment provision does not render the Arbitration Agreement illusory. 

Second, Plaintiff argues that if she agreed to arbitrate claims, she only agreed to 

arbitrate claims with UHG, not UHCS. (ECF No. 16 at 13.) However, a plain language 

reading of the Arbitration Agreement refutes this argument. In the first sentence of the 

Arbitration Agreement, “UnitedHealth Group” is defined as “UnitedHealth Group 

Incorporated and its subsidiaries.” (ECF No. 13-2 at 6.) (emphasis added). Thus, every 

subsequent reference to UHG refers to both UHG and all its subsidiaries, including 

UHCS. Plaintiff does not allege that UHCS is not a subsidiary of UHG. Thus, Plaintiff’s 

argument that the Arbitration Agreement is unenforceable because she did not contract 

with UHCS fails. 

Finally, Plaintiff argues that the Arbitration Agreement is invalid because it is 

unconscionable. For an arbitration agreement to be unconscionable, California law 

requires both substantive and procedural unconscionability. Armendariz v. Found. 

Health Psychcare Servs., Inc. 24 Cal. 4th 83, 99 (2000). 

/// 

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“The procedural element focuses on oppression and surprise by the party with more 

bargaining power while the substantive element aims to prevent overly harsh, one sided 

results.” Id. A sliding scale is used to assess procedural unconscionability in proportion 

to substantive unconscionability: “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. at 114. In Concepcion, the U.S. 

Supreme Court noted that California courts “have frequently applied this rule to find 

arbitration agreements unconscionable” and instructed California courts to stop applying 

unconscionability laws more stringently to arbitration agreements. 131 S. Ct. at 1746. 

The Ninth Circuit explained “Concepcion did not overthrow the common law contract 

defense of unconscionability . . . rather, the [U.S. Supreme] Court reaffirmed [it] . . . so 

long as those doctrines are ‘not applied in a fashion that disfavors arbitration.’” Kilgore v. 

KeyBank, Nat. Ass'n, 673 F.3d 947, 963 (9th Cir. 2012). 

Plaintiff contends that the Arbitration Agreement is procedurally unconscionable 

because she did know what rules would apply to a dispute, Defendants never gave her a 

copy of the rules that would govern a disagreement, and Plaintiff did not have the 

opportunity to negotiate. A plain reading of the Arbitration Agreement provides that the 

Employment Dispute Resolution Rules of the American Arbitration Association Rules 

(“AAA Rules”) govern unless the Arbitration Agreement includes a specific alteration. 

(ECF No. 13-2 at 7.)4 

/// 

/// 

/// 

 

4

 The Court takes judicial notice of the AAA Rules pursuant to Fed. R. Evid. 210. (A court may 

take judicial notice of matters which are “not subject to reasonable dispute in that it is either (1) generally 

known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination 

by resort to sources whose accuracy cannot reasonably be questioned.”) The AAA Rules are easily 

available through the AAA’s website. A Google search of “AAA Rules” shows that the AAA Rules appear 

first in the search results. Other federal courts have taken judicial notice of the AAA Rules pursuant to 

Fed. R. Evid. 210. Lastly, Plaintiff does not dispute the accuracy of the AAA Rules; instead she disputes 

whether the Arbitration Agreement incorporated them. 

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Under California law, “[f]or the terms of another document to be incorporated into the 

document executed by the parties, the reference must be clear and unequivocal, the 

reference must be called to the attention of the other party and he must consent thereto, 

and the terms of the incorporated document must be known or easily available to the 

contracting parties.” Shaw v. The Regents of the Univ. of Cal., 58 Cal. App. 4th 44, 54 

(1997). If an arbitration provision is contained within a document that is readily available 

to the contracting party, and its incorporation into the primary contract is clear and 

unequivocal, the arbitration provision is binding on the party. Koffler Elec. Mech. 

Apparatus Repair, Inc. v. Wartsila N. Am., Inc., No. C-11-0052 EMC, 2011 WL 1086035, 

at *4 (N.D. Cal., Mar. 24, 2011). A defendant is not required to specify that the 

incorporated document contains an arbitration clause to make the incorporation valid. 

Wolschlager v. Fidelity Nat’l Title Ins. Co., 111 Cal. App. 4th 784, 791 (2003). “All that is 

required is that the incorporation be clear and unequivocal and that the plaintiff can 

easily locate the incorporated document.” Id. In this case, the AAA Rules are readily 

available on AAA’s website. The AAA has one set of rules; thus, it is clear which set of 

rules apply. 

The Arbitration Agreement is also not procedurally unconscionable because 

Plaintiff had unequal bargaining power. Because of the inevitability that one contracting 

party almost always has a superior bargaining position, other factors need to be present 

to render an adhesion contract unenforceable. See Concepcion, 131 S. Ct. at 1749 n.5 

(noting that “roughly equivalent bargaining power” of the parties is not a requirement of 

enforceability of arbitration agreements under the FAA); 24 Hour Fitness,66 Cal. App. 

4th at 1213. (holding that an arbitration agreement is not unconscionable absent a 

showing that it was “unduly harsh, oppressive or one-sided.”) Besides unequal 

bargaining power (which is inevitable in an employment contract), no other conditions 

indicate an oppressive agreement. 

/// 

/// 

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The Arbitration Agreement is not substantively unconscionable. An agreement is 

substantively unconscionable if it is “unfairly one-sided.” Little v. Auto Stiegler, Inc., 

29 Cal. 4th 1064, 1071 (2003). In this case, the Agreement was mutual: both parties 

were bound by it unless it applied to “claims for severance benefits under the 

UnitedHealth Group Severance Pay Plan, claims for benefits under UnitedHealth 

Group’s other ERISA benefit plans, and claims for benefits under UnitedHealth Group’s 

Short-Term Disability Plan.” (ECF No. 13-2 at 6.) Plaintiff argues the Agreement does 

not apply to claims that employers would bring. (ECF No. 6 at 12.) However, the 

Arbitration Agreement applies to all claims (including claims employers are more likely to 

bring) unless they fall under the specific exceptions listed above. Further, the Arbitration 

Agreement does not prevent employees from seeking governmental agency assistance 

or temporary injunctive relief from the courts. Id. at 7. The Arbitration Agreement is also 

not substantively unconscionable because it does not significantly limit discovery. The 

Arbitration Agreement grants the arbitrator significant authority to “resolve all issues 

concerning discovery . . . [and] the authority to issue subpoenas for the appearance of 

witnesses or the production of documents pursuant to applicable law.” (ECF No. 13-2 at 

10.) Further, the Rules guide discovery; Rule 33 steers interrogatories, Rule 34 directs 

request for documents, and Rule 30 guides depositions. Id. Third, the Arbitration 

Agreement provides that proceedings are confidential unless “applicable law provides to 

the contrary.” Id. at 9. Applying the law is not overbroad or repugnant to public policy. 

Lastly, the Arbitration Agreement’s $25 fee to bring a claim is not overly harsh or onesided. Defendants bear all other costs and the nominal fee of $25 is cheaper than court 

filing fees. The arbitrator may award additional fees if it determines that Defendants or 

its employees brought a “frivolous, vexatious, or [bad faith] claim.” (ECF No. 13-2 at 12.) 

This provision applies to both Defendants and its employees; thus, it is not one-sided or 

overly harsh. Accordingly, Plaintiff’s argument that the Arbitration Agreement is invalid 

on the ground of unconscionability fails. 

/// 

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B. The Failure to Hire Claim is within the Scope of the Arbitration Agreement 

Before the Court can compel arbitration under the FAA, it must determine whether 

the arbitration agreement covers the dispute at issue. Lewis v. USB Fin. Servs. Inc., 

818 F. Supp. 2d 1161, 1165 (N.D. Cal. 2011). Because the FAA reflects a “liberal policy 

favoring arbitration agreements,” “any doubts concerning the scope of arbitrable issues 

should be resolved in favor of arbitration.” Moses, 460 U.S. at 24-25. Here, the 

arbitration agreement provides that . . . a legal claim arises under the policy “if it arises 

from or involves a claim under any federal, state, or local statute, ordinance, regulation 

or common law doctrine regarding or relating to employment discrimination terms, and 

conditions of employment or termination of employment.” (ECF No. 13-2 at 6.) 

Plaintiff contends that her failure to hire claim is not within the scope of the policy. 

(ECF No. 16 at 15.) As discussed above, the Court has already determined that the 

Arbitration Agreement applies. Thus, the terms of the Arbitration Agreement govern 

which disputes it covers. Plaintiff was an employee until Defendants eliminated her 

position on April 20, 2011. Plaintiff applied for the new position in February, nearly two 

months before Defendants eliminated her position. (ECF No. 6 at 11.) Additionally, the 

Arbitration Agreement covers any dispute “current or former employees” have with 

Defendants which “arises or relates to employment.” (ECF No. 13-2 at 6.) There is no 

dispute that Plaintiff is Defendants’ former employee as this entire lawsuit stems from 

her employment with Defendants. The Arbitration Agreement governs each of Plaintiff’s 

ten claims, including Plaintiff’s failure to hire claim. 

C. The Action Will be Stayed 

Section 3 of the FAA provides that if the Court determines issues should be 

referred to arbitration when a suit is pending, it shall stay the trial until the arbitration is 

complete. 9 U.S.C. § 3. 

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As discussed above, the Court determined that each of Plaintiff’s claims were arbitrable. 

Defendants filed a motion on July 30, 2012 requesting the Court to stay the action 

pending trial. (ECF No. 13-1 at 12.) In accordance with the FAA, the Court will stay the 

action pending arbitration. 

CONCLUSION 

For the reasons stated above, Defendants’ Motion to Compel Arbitration and Stay 

the Action Pending the Arbitration (ECF No. 13) is GRANTED. Plaintiff is ordered to 

submit her claim to arbitration. Since arbitration proceedings would appear to resolve 

most if not all of Plaintiff’s claims in the Complaint (ECF No. 6), the proceedings in this 

Court are stayed pending completion of arbitration, or upon further order of the Court. 

IT IS SO ORDERED. 

DATED: December 6, 2012 

c4d6b0d3 

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