Duarte v. JP Morgan Chase Bank

• Decision Date: 15 November 2021
• Docket Number: 2:21-cv-01907-ODW (AFMx)
• Court: U.S. District Court — Central District of California
• Parties: ROCIO DUARTE, an individual and on behalf of all others similarly situated, Plaintiffs, v. JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a federally chartered bank, Defendant.

ROCIO DUARTE, an individual and on behalf of all others similarly situated, Plaintiffs,
v.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a federally chartered bank, Defendant.

No. 2:21-cv-01907-ODW (AFMx)

United States District Court, C.D. California

November 15, 2021

ORDER GRANTING DEFENDANTS' MOTION TO COMPEL ARBITRATION [18]

OTISD. WRIGHT, II UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff Rocio Duarte is suing her former employer, Defendant JPMorgan Chase Bank, National Association (“Chase”) for violations of various provisions of the wage-and-hour provisions of the California Labor Code. Before the Court is Chase's Motion to Compel Arbitration. (Mot. Compel Arbitration (“Mot.”), ECF No. 18.) For the reasons that follow, Chase's Motion is GRANTED.^[1]

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II. BACKGROUND

Chase is a federally chartered bank with its main office in Columbus, Ohio. (Notice of Removal Ex. D (“Articles of Association”), ECF No. 1-4.) On August 14, 2019, by way of an offer letter signed by Chase's CEO, Chase extended to Duarte an offer to work as an associate banker at one of its California locations. (Decl. of Charles Van Valkenburg (“Van Valkenburg Decl.”) ¶ 5, Ex. A (“Offer Letter”), ECF No. 18-3.)

The second page of the Offer Letter contained a section titled “Terms & Conditions” which stated that the offer was “subject to all the terms, conditions and attachments included in this document, the Binding Arbitration Agreement and all Chase policies and procedures.” (Id. at 4.) Included with the Offer Letter was an appendix approximately nine pages long. (See Id. at 5-14.) Approximately five of those pages were devoted to the terms of an arbitration agreement headlined with the words “Binding Arbitration Agreement” in bold font. (See Id. at 7-12.) The Binding Arbitration Agreement (“Agreement”) purported to bind both Chase and Duarte to final arbitration for “all legally protected employment-related claims” including “violations of . . . common law, federal, state, or local statute, ordinance, regulation or public policy.” (Id. at 8.) It also stated that arbitration would be governed by the Employment Arbitration Rules of the AAA (“AAA Rules”). (See Id. at 9.) The Agreement did not include a copy of the AAA Rules, but it did provide the website where the AAA Rules are located. (See id.)

The Offer Letter anticipated an August 28, 2019 start date and stated, “If you do not accept the offer within a reasonable timeframe from the date of delivery, we will consider it withdrawn.” (Id. at 3.)

Duarte electronically signed the Offer Letter on August 14, 2019, the same day she received it. (See Id. at 15.) Two weeks later, on August 28, 2019, she began working for Chase. (Van Valkenburg Decl. ¶ 4.) Her employment with Chase ended sometime in late 2020. (Notice of Removal Ex. A (“Compl.”) ¶ 9, ECF No. 1-1.)

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Duarte now asserts nine causes of action against Chase under the California Labor Code and California Business and Professions Code for: (1) failure to pay wages for all hours worked, (2) failure to pay overtime wages, (3) failure to provide meal periods, (4) failure to provide rest periods, (5) failure to furnish accurate itemized wage statements, (6) failure to pay wages due upon separation of employment, (7) failure to provide paid sick time, (8) failure to maintain accurate records concerning shift times and meal times, and (9) engaging in unfair competition. (See Id. ¶¶ 18-60.) In response, Chase moves to compel arbitration pursuant to its rights under the Agreement. (See Mot.) The Motion is fully briefed. (Opp'n, ECF No. 19; Reply, ECF No. 20.)

III. LEGAL STANDARD

The Federal Arbitration Act (“FAA”) governs a contract dispute relating to an arbitration provision if the contract affects interstate commerce. Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 273-74 (1995). When it applies, the FAA restricts a court's inquiry into compelling arbitration to two threshold questions: (1) whether there was an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute. Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (citation omitted). If the answer to both questions is yes, the FAA requires the Court to enforce the arbitration agreement according to its terms. See Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719-20 (9th Cir. 1999). However, the FAA includes a “savings clause” that allows for the invalidation of an arbitration agreement “upon such grounds as exist at law or in equity for the revocation of any contract.” This “permits agreements to arbitrate to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability, but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (quotation marks omitted).

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IV. DISCUSSION

As a preliminary matter, Chase asks the Court to take judicial notice of a state court order compelling arbitration in an unrelated case, (ECF No. 18-4), and Duarte asks the Court to take judicial notice of a Statement of Information Chase filed with the California Secretary of State, (ECF No. 19-1). The Court does not find it necessary to rely on these documents to resolve the instant Motion and accordingly does not take judicial notice of them.

Substantively, Duarte makes two arguments opposing Chase's Motion to Compel Arbitration. (See Opp'n.) First, Duarte argues that California law applies and does not recognize agreements mandating arbitration for wage-and-hour claims. (See Id. at 9-12.) Second, Duarte argues that the Agreement is unconscionable and therefore unenforceable. (See Id. at 12-26.) Duarte is incorrect on both counts.

A. Validity of the Agreement

Duarte does not challenge the validity of the Agreement on contract formation grounds. Both parties agree that Chase presented the Offer Letter containing the Agreement to Duarte, Duarte signed it, and Chase thereafter employed her. (See Motion 1; Opp'n 7-8.) Nor does Duarte challenge the applicability of the Agreement, which purports to cover “all legally protected employment-related claims, ” to all her claims in the current dispute. (See generally Opp'n.) Instead, Duarte argues that California law invalidates the Agreement. (See Id. at 9-10.) This argument fails because the FAA governs the Agreement, and the FAA preempts the California law Duarte relies on.

1. The FAA Governs the Agreement

Section 2 of the FAA “makes enforceable a written arbitration provision in ‘a contract evidencing a transaction involving commerce.'” Allied-Bruce, 513 U.S. at 268. (quoting 9 U.S.C. § 2). The Supreme Court has interpreted the broad language of the FAA as signaling Congress' intent “to provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause.” Perry v. Thomas, 482 U.S. 483, 490 (1987). Therefore, an arbitration agreement is no less enforceable than any

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other contractual clause as long as the contract it is a part of “affect[s] commerce.” Allied-Bruce, 513 U.S. at 273-74.

Chase states that it operates more than four thousand branches in thirty-eight states, (Mot. 5), and Duarte does not dispute this general claim. Rather, Duarte asserts that Chase must prove that her employment affected interstate commerce and has failed to do so. (See Opp'n 11-12.)

The clear inference from evidence on the record is that Duarte's employment did, in fact, affect interstate commerce. Chase asserts that banking associates like Duarte regularly interact with accounts and customer information generated outside of California. (See Reply 3.) The evidence confirms Duarte worked in California as an associate banker for a federally chartered national bank whose main office is in Ohio. (See Articles of Association 1; Offer Letter 13^[2] (listing, in statutorily required pay information notice, Chase's “Entity Type” as “National Banking Association”).) Especially in the absence of evidence to the contrary, it takes no speculation to conclude that, during her employment, Duarte, like other bank associates, interacted with customers and accounts outside of California. See Maxum Founds., Inc. v. Salus Corp., 779 F.2d 974, 978 n.4 (4th Cir. 1985) (refusing, where party seeking arbitration under FAA asserts contract affects interstate commerce and party opposing arbitration “does not come forward with evidence to rebut” that assertion, to “read into the Act a requirement of further proof” by party invoking FAA).

Duarte primarily relies on Hoover v. Am. Income Life Ins. Co., 206 Cal.App.4th 1193 (2012) for her assertion that the FAA does not govern the Agreement. As a preliminary matter, Hoover is a California case, and its interpretation of the reach of the FAA is not binding upon the Court. Wyant v. City of Lynnwood, 621 F.Supp.2d 1108, 1113 (W.D. Wash. 2008) (“When a state court interprets federal law, its decision does not bind a federal court.”). Moreover, Hoover is distinguishable. In Hoover, the facts

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established only that the defendant employer was based in Texas and that the plaintiff employee worked in California. 206 Cal.App.4th at 1207. In deciding that the FAA did not govern their employment agreement, the California Court of Appeal noted that the defendant employer “did not work in other states or engage in multimillion dollar loan activity that affected interstate commerce” and was “not . . . a national stock brokerage firm or . . . a member of a national stock exchange.” Id. at 1207, 1208. The evidence therefore did not indicate that the defendant was engaged in substantial interstate commerce. Id. Chase, by contrast, is a national bank, and the parties do not dispute that Chase is engaged in substantial interstate commerce or that the work of bankers who interface with Chase accounts and customers does not affect...