Castillo v. Cleannet USA, Inc.
Citation | 358 F.Supp.3d 912 |
Decision Date | 18 December 2018 |
Docket Number | Case No. 17-cv-07277-JCS |
Parties | Luis CASTILLO, Plaintiff, v. CLEANNET USA, INC., et al., Defendants. |
Court | U.S. District Court — Northern District of California |
Carole Vigne, Henry Sanford Hewitt, Mana Barari, Legal Aid at Work, Monique Olivier, Olivier Schreiber & Chao LLP, San Francisco, CA, for Plaintiff.
Laura Emily Hayward, Joshua Eric Elefant, R. Brian Dixon, Littler Mendelson, P.C., Charles G. Miller, Charles Griffith Towle, Sony Broto Barari, Bartko Zankel Bunzel & Miller, San Francisco, CA, for Defendants.
ORDER DENYING MOTION TO COMPEL ARBITRATION
Re: Dkt. No. 65
Plaintiff Luis Castillo brings a putative class action against Defendants CleanNet USA, Inc. ("CleanNet") and D&G Enterprises, Inc. dba CleanNet of the Bay Area and CleanNet of San Jose ("D&G"), asserting claims under the federal Trafficking Victims Protection Reauthorization Act ("TVPRA"), 18 U.S.C. § 1959, and the California Trafficking Victims Protection Act ("CTVPA"), Cal. Civ. Code § 52.5.1 Defendants bring a Motion to Compel Arbitration and Stay the Proceeding ("Motion") based on an arbitration provision in the franchise agreement between D&G and Castillo. The Motion has been fully briefed and the Court has permitted Castillo to file a sur-reply and supplemental evidence to respond to new evidence and arguments filed by Defendants with their Reply brief. A hearing on the motion was held on December 7, 2018 at 9:30 a.m. For the reasons stated below, the Motion is DENIED.2
Luis Castillo entered into a franchise agreement ("Franchise Agreement") with D&G on September 26, 2011. Declaration of David P. Crum in Support of Defendants CleanNet USA, Inc. and D&G Enterprises, Inc.'s (d/b/a CleanNet of the Bay Area and CleanNet of San Jose) Motion to Compel Arbitration and Stay Proceedings ("Crum Decl.") ¶ 4 & Ex. A. D&G is "an area operator licensed by CleanNet USA to sell franchises and to operate a franchising business using the CleanNet USA® registered marks and proprietary system in the San Francisco Bay area."
Id. ¶ 3. To purchase the franchise, Castillo made a down payment of $8,500 and signed a promissory note for $5,000 on the day he signed the Franchise Agreement. Declaration of Luis Castillo in Support of Plaintiff's Opposition to Defendants' Motion to Compel Arbitration ("Castillo Decl.") ¶ 14; Crum Decl., Ex. B (Promissory Note).
The Franchise Agreement contains a section entitled "Dispute Resolution" that provides, in relevant part, as follows:
Crum Decl., Ex. A at ECF pp. 41-42. Section XXII also provides for waiver of punitive damages, stating:
FRANCHISEE HEREBY IRREVOCABLY WAVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT OR CLAIM FOR ANY PUNITIVE, EXEMPLARY, CONSEQUENTIAL, OR SPECULATIVE DAMAGES INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, AND AGREES THAT, IN THE EVENT OF A DISPUTE, FRANCHISEE SHALL BE LIMITED TO THE ACTUAL DAMAGES SUSTAINED EXCEPT AS OTHERWISE PROVIDED HEREIN.
Id. (Section XXII(G) ).
Finally, Section XXII contains a savings clause stating that "[i]f any provision of this Section XXII would violate applicable state or federal law, then the parties agree that such provision shall be excluded from the terms of this Agreement, or shall be modified to the minimum extent necessary to make the terms hereof lawful." Id. at ECF p. 82 (Franchise Agreement, Section XXII(F) ). Likewise, the Franchise Agreement contains a separate severability provision that provides as follows:
Except as expressly provided to the contrary herein, each section, part, term and/or provision of this Agreement shall be considered severable, and any section, part, term and/or provision herein is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation by a court or agency having valid jurisdiction, such shall not impair the operation of, or have any other effect on, such other portions, sections, parts, terms and/or provisions of this Agreement as may remain otherwise intelligible, and the latter shall continue to be given full force and effect and bind the parties hereto, and said invalid sections, parts, terms and/or provisions shall be deemed not to be a part of this Agreement; provided, however, that if Franchisor determines that such finding of invalidity or illegality adversely affects the basic consideration of this Agreement, Franchisor, at its option, may terminate this Agreement.
Id. at ECF p. 83 (Franchise Agreement, Section XXIV(A) ).
The Franchise Agreement also contains a provision addressing the use of English language, which states as follows:
English Language: Franchisee acknowledges that Franchisor's disclosure document and this Agreement are written in the English language. If English is not Franchisee's native language, Franchisee warrants and represents that Franchisee has had the opportunity for translation of the disclosure document and this Agreement; that all aspects of this Agreement have been explained to Franchisee's satisfaction; and that Franchisee understands and accepts...
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