Chavarria v. Ralphs Grocer Co.

• Decision Date: 15 September 2011
• Docket Number: Case No. CV 11–02109 DDP (VBKx).
• Parties: Zenia CHAVARRIA, individually, and on behalf of other members of the general public similarly situated, Plaintiff, v. RALPHS GROCER COMPANY, an Ohio corporation, Defendants.
• Court: U.S. District Court — Central District of California

812 F.Supp.2d 1079

Zenia CHAVARRIA, individually, and on behalf of other members of the general public similarly situated, Plaintiff,

v.RALPHS GROCER COMPANY, an Ohio corporation, Defendants.

Case No. CV 11–02109 DDP (VBKx).

United States District Court, C.D. California.

Sept. 15, 2011.

Mark Yablonovich, Neda Roshanian, Michael Damon Coats, Mark Yablonovich Law Offices, Los Angeles, CA, for Plaintiff.

Linda S. Husar, Mara D. Matheke, Steven B. Katz, Reed Smith LLP, Los Angeles, CA, for Defendants.

ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION ON AN INDIVIDUAL BASIS; AND TO DISMISS OR STAY ACTION

DEAN D. PREGERSON, District Judge.

In March 2011, Zenia Chavarria (“Plaintiff”) brought suit individually and on behalf of others similarly situated against her employer, Ralphs Grocery Company (“Ralphs”). Plaintiff alleges various wage and hour violations of California law and seeks compensation for unpaid wages. (Compl. ¶¶ 30–88.) Ralphs now brings a Motion to Compel Arbitration on an Individual Basis and to Dismiss or Stay Action under the Federal Arbitration Act (“FAA”). (Dkt. No. 6.)

Having read the parties' papers, considered the arguments therein, and heard oral argument, the court concludes that the arbitration agreement Ralphs seeks to enforce is procedurally and substantively unconscionable, and DENIES Ralphs' motion.

I. Background

On September 22, 2008, Plaintiff applied for a job at Ralphs. To that end, she completed and signed Ralphs' employment application (the “Employment Application” or “Application”). (Def.'s Motion, Ex. 1, Employment Application.)

The Employment Application includes a paragraph stating that Ralphs has a Dispute Resolution Program. The Application states that the prospective employee agrees that the “Dispute Resolution Program [ ] includes a Mediation & Binding Arbitration Policy (the ‘Policy’),” which is “incorporated into this Employment Application by this reference as though it is set forth in full ....” (Def.'s Motion, Ex. 1, Employment Application.) The Employment Application concludes with language stating that the applicant has either “received a copy of the Policy or one has been made available to [her] through the Company's Director of Personnel & Benefits, 1100 West Artesia Boulevard, Compton, CA 90220 ....”

At some point after September 22, 2008, Plaintiff was interviewed and hired by Ralphs.¹ On October 14, 2008, at a new employee orientation attended by Plaintiff, Plaintiff wrote her initials on a form, which acknowledged receipt of twenty-two different forms and manuals. (Decl. Cotes, Ex. A.) Included in that list was an acknowledgment of receipt of the full terms of the “Mediation & Binding Arbitration Policy” (i.e. the “Arbitration Policy” or the “Policy”).

The Policy is four single-spaced pages long and provides, inter alia:

Policy Preamble, 1., 2., & 4. All employment and pre-employment disputes including civil rights claims, harassment claims, and wage and hour claims will be arbitrated ²

[T]his Arbitration Policy is the exclusive mechanism for formal resolution of disputes and awards of relief that otherwise would be available to Employees or the Company in a court of law or equity or in an administrative agency.

...

Covered Disputes are employment-related disputes ... which involve the interpretation or application of this Arbitration Policy, the employer/employee relationship, an Employee's actual or alleged employment with Ralphs ..., the termination of such employment, or applying for or seeking such employment.

...

Covered Disputes include, for example and without limitation, disputes having anything to do with the interpretation or application of this Arbitration Policy ..., and disputes, claims or causes of action for unfair competition, unfair business practices ... fraud, breach of contract, injunctive relief, unlawful harassment, unlawful discrimination, unlawful retaliation, failure to provide reasonable accomodation(s), unpaid wages or failure to pay overtime or other compensation (or the computation thereof), failure to provide family or medical (or other required) leave, failure to consider for hiring, failure to hire for employment and actual or constructive termination of the employment relationship. Covered Disputes ... [also] include all Employee's individual statutory claims or disputes under federal, state and local laws including, for example and without limitation, any claims or disputes arising under the California Fair Employment and Housing Act; ... the Civil Rights Act of 1964; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Family Medical Leave Act; the California Family Rights Act; the California Labor Code ...; the Fair Labor Standards Act; the Employee Retirement Income Security Act; ... and the United States Code, as enacted and amended.

3. Jury trial waiver

There are no judge or jury trials permitted under this Arbitration Policy. The Company [i.e. Ralphs] and Employees waive any right that they have or may have to a judge or jury trial of any Covered Disputes ....

7. The arbitrator must be a retired federal or state judge, and the arbitrator may not be an organization such as JAMS or AAA

[T]he ‘Qualified Arbitrator’ must be a retired state or federal judge ... from the state jurisdiction or federal jurisdiction in which the Covered Dispute(s) arose or will be arbitrated.

...

[N]either the American Arbitration Association (“AAA”) nor the Judicial Arbitration & Mediation Service (“JAMS”) will be permitted to administer any arbitration held under or pursuant to this Arbitration Policy.

7. Selection of an arbitrator: Ralphs will always select the arbitrator for any employee-initiated dispute, absent mutual agreement to the contrary

If the parties do not mutually agree on the selection and appointment of a Qualified Arbitrator, the following selection method will be used to select and appoint a Qualified Arbitrator: (1) Each party to the arbitration proceeding will propose a list of three Qualified Arbitrators that they want appointed to hear and decide the Covered Dispute(s); and (2) The parties will alternate in striking one name from any other party's list of proposed Qualified Arbitrators, with the first strike to be made by a party who has not demanded arbitration pursuant to this Arbitration Policy, followed by a continuing rotation of alternating adverse parties until there is only one proposed Qualified Arbitrator that has not been stricken, who will be deemed to be the parties' selected and appointed Qualified Arbitrator to hear and decide the Covered Dispute(s) that are the subject of the arbitration proceedings.

8. Discovery

[T]he parties will have the right to conduct normal discovery and to bring motions, as provided by the [Federal Rules of Civil Procedure].

...

8. Class action waiver

[T]here is no right or authority for any Covered Disputes to be heard or arbitrated on a class action basis, as a private attorney general, or on bases involving claims or disputes brought in a representative capacity on behalf of the general public

...

9. The Policy trumps any longer statutory statute of limitations

In the event that the applicable statute of limitations period as provided under governing law is longer than one year ... [Ralphs] and Employees agree that the applicable state of limitations period is shortened to one year.

10. Each party must bear their own attorney's fees.³ The Arbitrator's fees and any arbitration fees must be allocated and paid “up front” before evidence is received. Any fee dispute is resolved by the Arbitrator, but the Arbitrator is stripped of any authority to allocate fees other than 50/50 absent “settled” authority coming only from the Supreme Court. The decisions of all inferior courts are to be disregarded.

Each party to the arbitration will pay the fees for his or its own attorneys, subject to the remedies to which that party may later be entitled under applicable law. Ralphs ... in all cases where required by settled and controlling legal authority will pay up to all of the Qualified Arbitrator's and arbitration fees, as apportioned by the Qualified Arbitrator at the outset of the arbitration proceeding .... In all instances in which there is a dispute over the apportionment of the ... arbitration fees, such dispute is a Covered Dispute under this Arbitration Policy which must be resolved by the Qualified Arbitrator, who must apply and follow only decisions of the United States Supreme Court in resolving such dispute .... In the event settled and controlling [Supreme Court] legal authority does not require that one party or another bear a greater share of the Qualified Arbitrator's or arbitration fees, such fees will be apportioned equally between each set of adverse parties.(Def.'s Motion, Ex. 2, Mediation & Binding Arbitration Policy.)

From October 2008 to March 2009, Plaintiff worked for Ralphs in Los Angeles as a Service Deli Clerk. (Compl. ¶ 17.) Plaintiff's regular duties included preparing and roasting rotisserie chicken, preparing sandwiches, maintaining food safety standards, and keeping the service deli area clean. ( Id.)

In March 2011, Plaintiff brought suit against Ralphs for failure to pay Plaintiff overtime compensation, failure to pay Plaintiff for meal and rest periods during which she worked, and failure to provide complete and accurate wage statements in violation of the California Labor Code. ( Id. ¶¶ 21–22.) Plaintiff seeks relief on behalf of herself and others similarly situated, and she argues that the Arbitration Policy is unenforceable as unconscionable and that the Policy's class action waiver violates the National Labor Relations Act and California law. Ralphs moves this court to compel individual arbitration. (Def.'s Motion 2:9–21.)

II. Legal Standard

Under the FAA, 9 U.S.C. § 1 et seq., a written agreement that controversies between the parties shall be settled by arbitration is “valid, irrevocable,...