Morvant v. P.F. Chang's China Bistro, Inc.

• Citation: 870 F.Supp.2d 831
• Decision Date: 07 May 2012
• Docket Number: Case No. 11–CV–05405 YGR.
• Parties: Zachary MORVANT, Jean Andrews, individually and on behalf of all others similarly situated, Plaintiffs, v. P.F. CHANG'S CHINA BISTRO, INC., P.F. Chang's III, LLC, and Does 1 through 100, inclusive, Defendants.
• Court: U.S. District Court — Eastern District of California

870 F.Supp.2d 831

Zachary MORVANT, Jean Andrews, individually and on behalf of all others similarly situated, Plaintiffs,

v.P.F. CHANG'S CHINA BISTRO, INC., P.F. Chang's III, LLC, and Does 1 through 100, inclusive, Defendants.

Case No. 11–CV–05405 YGR.

United States District Court,

N.D. California.

May 7, 2012.

Hannah R. Salassi, Matthew Roland Bainer, Scott Cole and Associates, APC, Oakland, CA, for Plaintiffs.

Rebecca D. Eisen, San Francisco, CA, Lauren Sunley Kim, Palo Alto, CA, for Defendants.

Order Granting In Part and Denying In Part Defendants' Motion to Compel Plaintiffs' Individual Claims to Arbitration

YVONNE GONZALEZ ROGERS, District Judge.

Plaintiffs Zachary Morvant and Jean Andrews, former employees of P.F. Chang's China Bistro restaurants, bring this putative class action on behalf of all current and former P.F. Chang's China Bistro restaurant workers, for violations of the California Labor Code and other California laws. They allege that Defendants P.F. Chang's China Bistro, Inc. and P.F. Chang's III, LLC, (“Defendants” or “P.F. Chang's”) failed to provide meal and rest breaks, refused to pay for missed meal and rest breaks, failed to pay all overtime compensation due, and failed to provide accurate wage statements.

Defendants have filed a Motion to Compel Plaintiffs Zachary Morvant and Jean Andrews' Individual Claims to Arbitration on the grounds that Plaintiffs' claims are covered by the terms of P.F. Chang's dispute resolution policy, which requires employees to arbitrate any dispute arising out of their employment with P.F. Chang's. See Defs.' Mot., Dkt. No. 40.

Having carefully considered the papers submitted, and the argument of counsel, and for the reasons set forth below, the Court finds that Defendants' dispute resolution policy is enforceable as against Plaintiff Andrews who must arbitrate her claims. Defendants have not established that Plaintiff Morvant agreed to arbitrate his claims and thus, Morvant cannot be compelled to arbitrate. Accordingly, the Court hereby Grants In Part and Denies In Part the Motion to Compel Arbitration.

I. BACKGROUND

P.F. Chang's Dispute Resolution Policy requires that “any dispute arising out of or related to an Employee's employment with P.F. Chang's” must be “resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial.” Dkt. No. 42–1, Exhibit A, § 1 (“Arbitration Agreement”). The Arbitration Agreement also contains a class action waiver, which states that there “will be no right or authority for any dispute to be brought, heard or arbitrated” as a class action. Id. § 4. P.F. Chang's implemented its Dispute Resolution Policy in September of 2006. P.F. Chang's states that all then-current employees, and all new hires going forward, were provided a copy of the Dispute Resolution Policy and required to sign and return an acknowledgement of receipt of the Dispute Resolution Policy.

The notice accompanying the Dispute Resolution Policy states “this policy applies to you” and explains that “[t]he Dispute Resolution Policy will provide all employees a quick and efficient avenue to bring forward any employment-related disputes that may arise between you and the Company.” Id. at 2. It requests that the employee sign the acknowledgement form and return it to his or her supervisor. Id. The acknowledgement form states “this Policy goes into effect immediately upon [the employee's] signature below but in no event later than September 15, 2006.” Id. at 5.

A. Factual History

Plaintiff Zachary Morvant worked for P.F. Chang's from early 2005 until December 26, 2006, first as a food runner and later as a bartender. Thus, Morvant already was employed with P.F. Chang's when it implemented its Dispute Resolution Policy in September of 2006. Defendants maintain that they would have provided Morvant with a copy of the Dispute Resolution Policy and required him to sign and return an acknowledgement of receipt but “Defendants have, as yet, been unable to locate a physical copy of Mr. Morvant's signed acknowledgement.” Defs.' Reply 3, Dkt. No. 49. Morvant explains that the reason P.F. Chang's is unable to locate a signed acknowledgement is because he never signed the Arbitration Agreement. Morvant claims that he received a copy of the Arbitration Agreement but chose not to sign the document because he did not want to be bound by its terms. See Morvant Supp. Dec., Dkt. No. 53–1.

Plaintiff Jean Andrews worked as a food server for P.F. Chang's from August 26, 2008 through April 11, 2009. On the date of her hire, Andrews signed P.F. Chang's Dispute Resolution Policy Acknowledgement form, stating that she had received the Dispute Resolution Policy, “which goes into effect immediately upon my signature.” A copy of Andrews' signed acknowledgement is attached to Defendants' Motion to Compel. See Dkt. No. 42–3.

B. Procedural History

Plaintiff Zachary Morvant commenced this lawsuit as an individual action in the Sacramento County Superior Court on December 14, 2010. Plaintiff never served the individual complaint on Defendants. On June 17, 2011, the complaint was amended to add Jean Andrews as a Plaintiff and to convert Morvant's individual action into a putative class action. Defendants were first served with this lawsuit on June 20, 2011. Defendants filed their answer to the amended complaint on July 18, 2011. The following day, July 19, 2011, Defendants removed the case to the Eastern District of California based upon the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(2)(A), and diversity jurisdiction, 28 U.S.C. § 1332(a). Subsequently, on October 28, 2011, the case was transferred to the Northern District of California. Plaintiffs filed the operative, Second Amended Complaint on January 9, 2012.

II. LEGAL STANDARD

The Federal Arbitration Act (“FAA”) reflects “a liberal federal policy favoring arbitration” and requires federal courts to compel arbitration of any claim covered by a written and enforceable arbitration agreement. AT & T Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1745–47, 179 L.Ed.2d 742 (2011)( Concepcion ). In ruling on a motion to compel arbitration, the court's role is limited to determining whether: (1) there is an agreement between the parties to arbitrate; (2) the claims at issue fall within the scope of the agreement; and (3) the agreement is valid and enforceable. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir.2004). If those questions are answered in the affirmative, the court must compel the parties to arbitrate their claims. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (“By its terms, 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”).

Agreements to arbitrate are 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. Courts must apply ordinary state-law principles in determining whether to invalidate an agreement to arbitrate. Ferguson v. Countrywide Credit Indus., 298 F.3d 778, 782 (9th Cir.2002). Thus, arbitration agreements may be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability. Concepcion, supra, 131 S.Ct. at 1745–47. Courts may not proceed beyond those well-established contractual defenses and employ defenses solely based on the fact that the agreement at issue is an arbitration agreement. Id. at 1746–47.

III. DISCUSSION

The first task is to determine whether there is an agreement between the parties to arbitrate. Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). As arbitration is a matter of contract, a party cannot be required to arbitrate a claim that it has not agreed to arbitrate. AT & T Tech., Inc. v. Communs. Workers of Am., 475 U.S. 643, 648–50, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). In other words, the Court may not compel a party to comply with the terms of an agreement to which he or she never agreed.

A. Zachary Morvant

The parties dispute whether Morvant agreed to arbitrate his employment related claims pursuant to the Arbitration Agreement. Defendants have not provided a signed copy of the contract they seek to enforce. Morvant has filed a Declaration stating that he remembers receiving the document and did not sign the document because he did not want to be bound by its terms. Morvant argues that he did not agree to arbitrate because he did not sign an Arbitration Agreement. Defendants argue that Morvant did not need to sign the Arbitration Agreement in order to be bound by its terms. According to Defendants, “[a]ll California employees were deemed to be subject to P.F. Chang's Dispute Resolution Policy if they continued their employment with P.F. Chang's after the September 2006 policy distribution and implementation.” Defs.' Mot. 5.

While a party's acceptance of an agreement need not be explicit, “[a]s a general rule, silence or inaction does not constitute acceptance of an offer.” Circuit City Stores, Inc. v. Najd, 294 F.3d 1104, 1109 (9th Cir.2002). An employee's continued employment has been found to constitute implied acceptance of the changed terms of employment where the employee was informed that his or her continued employment would constitute acceptance of those changed terms. Although Defendants contend continued employment constitutes acceptance, the decisional law they cite to support this proposition is distinguishable. In Kruzich v. Chevron Corp., the employer's dispute resolution policy requiring arbitration expressly stated that “[a]n employee's continued employment in Chevron will mean they agree to use [the dispute resolution policy].” 2011 WL 6012959, at *4 (N.D.Cal. Dec. 1, 2011). Because the employee plaintiff continued his...