Hansber v. Ulta Beauty Cosmetics, LLC

• Decision Date: 09 November 2022
• Docket Number: 1:21-cv-00022-AWI-CDB
• Parties: SHAHARA HANSBER, NANG CHAN, and JESUS MORENO, on behalf of themselves, all others similarly situated, and on behalf of the general public, Plaintiffs, v. ULTA BEAUTY COSMETICS, LLC; and DOES 1-100, Defendants
• Court: U.S. District Court — Eastern District of California

SHAHARA HANSBER, NANG CHAN, and JESUS MORENO, on behalf of themselves, all others similarly situated, and on behalf of the general public, Plaintiffs,
v.
ULTA BEAUTY COSMETICS, LLC; and DOES 1-100, Defendants

No. 1:21-cv-00022-AWI-CDB

United States District Court, E.D. California

November 9, 2022

ORDER ON DEFENDANT'S MOTION TO COMPEL INDIVIDUAL ARBITRATIONS OF PLAINTIFFS SHAHARA HANSBER AND JESUS MORENO AND TO STAY CASE

(Doc. Nos. 51, 52)

Plaintiffs Shahara Hansber, Nang Chan, and Jesus Moreno filed this class action lawsuit against Defendant Ulta Beauty Cosmetics, LLC (“UBC”), alleging violations of California's Private Attorneys General Act (“PAGA”), Labor Code, and Business & Professions Code. Doc. No. 29. Currently before the Court are UBC's Motions to Compel Individual Arbitrations of Hansber and Moreno and to Stay Proceedings Pending Ruling on Motions and Completion of Arbitrations. Doc. Nos. 51, 52. For the following reasons, the Court will grant in part and deny in part UBC's Motions.

BACKGROUND

Hansber is a former employee of Exact Staff Inc. (“Exact”), and Moreno is a former employee of Spherion Staffing LLC (“Spherion”). Doc. No. 51 at 12; Doc. No. 52 at 12. Both Hansber and Moreno signed arbitration agreements at the start of their employment to submit all claims and controversies arising from their employment to individual arbitration. Doc. No. 51 at 14-15; Doc. No. 52 at 14-15.

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UBC entered into separate staffing services agreements with Exact and Spherion, pursuant to which Exact and Spherion agreed to recruit, screen, and hire workers who would be assigned to work at Ulta Inc.'s distribution center in Fresno, California (“Fresno DC”). Doc. No. 51 at 13-14; Doc. No. 52 at 13-14. Both Hansber and Moreno were placed on work assignments at the Fresno DC. Doc. No. 51 at 12; Doc. No. 52 at 12. Chan also worked at the Fresno DC, but unlike Hansber and Moreno, Chan applied to, interviewed with, and was hired by UBC without entering into an arbitration agreement. Doc. No. 53 at 8.

On November 4, 2020, Hansber, Moreno, and Chan filed a First Amended Class Action Complaint against UBC and Spherion in Kern County Superior Court, alleging violations of California's Labor Code, PAGA, and Business & Professions Code.^[1] Doc. No. 1, Ex. 1. On January 5, 2021, Spherion removed the matter to this Court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). Id. On March 15, 2021, Plaintiffs filed a Second Amended Complaint which dropped Spherion and left UBC as the sole Defendant. Doc. No. 15. On April 18, 2021, UBC filed a motion to dismiss and/or strike the Second Amended Complaint, which the Court granted in part and denied in part. Doc. Nos. 18, 26. On November 2, 2021, Plaintiffs filed the operative Third Amended Complaint, alleging eight cause of action against UBC for (1) failure to pay all straight time wages; (2) failure to pay all overtime wages: (3) failure to provide meal periods; (4) failure to authorize and permit rest periods; (5) knowing and intentional failure to provide accurate itemized wage statements; (6) failure to pay all wages upon termination or separation; (7) unfair competition; and (8) civil penalties under the PAGA. Doc. No. 29.

On December 17, 2021, UBC filed a motion to join Exact and Spherion as necessary parties under Fed.R.Civ.P. 19(a), which ultimately was denied. Doc. Nos. 33, 48. On August 12, 2022, UBC filed the instant motions to compel individual arbitrations of Hansber and Moreno and to stay all proceedings pending the rulings on the motions and completion of arbitrations. Doc. Nos. 51, 52.

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LEGAL STANDARD

The Federal Arbitration Act (“FAA”) provides that written agreements to arbitrate disputes arising out of transactions involving interstate commerce “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; Zoller v. GCA Advisors, LLC, 993 F.3d 1198, 1201 (9th Cir. 2021). Further, the FAA permits a party “aggrieved by the alleged . . . refusal to arbitrate” to petition any federal district court for an order compelling arbitration. 9 U.S.C. § 4; Van Dusen v. United States Dist. Court for the Dist. of Ariz., 654 F.3d 838, 842 (9th Cir. 2011). A district court's role is “limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” Revitch v. DIRECTV, LLC, 977 F.3d 713, 716 (9th Cir. 2020) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). If the answer to both questions is ‘yes,' the district court must enforce the arbitration agreement in accordance with its terms; there is no place for discretion by the district court. Revitch, 977 F.3d at 716. Thus, “courts should order arbitration of a dispute only where the court is satisfied that neither the formation of the parties' arbitration agreement nor (absent a valid provision specifically committing such disputes to an arbitrator) its enforceability or applicability to the dispute is in issue.” Granite Rock Co. v. International Bhd. Of Teamsters, 561 U.S. 287, 299 (2010); Revitch, 977 F.3d at 716.

If a court orders the parties to arbitration, the FAA provides for the court to stay the matter pending completion of the arbitration. See 9 U.S.C. § 3; Ziober v. BLB Res., Inc., 839 F.3d 814, 817 (9th Cir. 2016). However, when all claims in a complaint are within the scope of an arbitration agreement, the court may dismiss the entire action instead of issuing a stay. Johnmohammadi v. Bloomingdale's, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014). The party seeking to compel arbitration, has the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (citing Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal.4th 394, 413 (1996)).

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DISCUSSION

The parties do not dispute that Hansber and Moreno entered into agreements to arbitrate with Exact and Spherion, respectively. Neither do the parties dispute that the FAA applies to the above agreements or that UBC may enforce them despite being a nonsignatory. However, the parties disagree as to whether UBC waived its right to arbitration, and if not, whether Hansber and Moreno's representative PAGA claims and all of Chan's claims should be stayed pending the arbitrations of Hansber and Moreno's individual claims. The Court will address each issue in turn below.

1. Waiver

Plaintiffs' Arguments

Plaintiffs argue that UBC waived its right to arbitrate because its actions were inconsistent with the right to arbitrate. Specifically, Plaintiffs claim that because UBC substantially invoked the litigation machinery by removing the matter to this Court, filing several motions, and engaging in discovery, UBC unjustifiably delayed the assertion of its right to arbitrate and, therefore, waived it. Furthermore, Plaintiffs argue that UBC delayed its assertion to arbitrate for tactical reasons and that Plaintiffs would be prejudiced if ordered to arbitrate this late in the case.

Defendant's Arguments

UBC argues it did not waive its right to arbitrate Hansber or Moreno's claims because it repeatedly asserted its right to arbitrate and has not otherwise defended against Plaintiffs' claims in a manner inconsistent with its right to arbitrate. Additionally, UBC contends that its purported delay in seeking arbitration was justified and did not result in any prejudice to Plaintiffs. Furthermore, UBC argues that policy concerns disfavor waiver of the right to arbitrate and that in any event, it is the role of the arbitrator, and not the Court, to decide any disputes regarding waiver because the parties clearly and unmistakably agreed to arbitrate the issue of waiver.

Legal Standard

The right to arbitration, like other contractual rights, can be waived. Martin v. Yasuda, 829 F.3d 1118, 1124 (9th Cir. 2016); Saint Agnes Med. Ctr. v. PacifiCare of Cal., 31 Cal.4th 1187, 1195 (2003). Under the FAA “[a] party seeking to prove waiver of a right to arbitration

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must demonstrate: (1) knowledge of an existing right to compel arbitration [and] (2) acts inconsistent with that existing right.” Martin, 829 F.3d at 1124; see also Morgan v. Sundance, Inc., 142 S.Ct. 1708, 1714 (2022) (holding that prejudice is no longer a condition of finding that a party waived its right to compel arbitration). Furthermore, under California law, factors that may be considered to determine whether arbitration has been waived include “(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage ofjudicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.” Saint Agnes Med. Ctr., 31 Cal.4th at 1196; see also Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1124 (9th Cir. 2008). Although “[t]here is no concrete test to determine whether a party has engaged in acts that are inconsistent with its right to arbitrate,” Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935, 941 (9th Cir. 2019); Saint Agnes Med. Ctr., 31 Cal.4th at 1195, “a party acts inconsistently with exercising the right to arbitrate when it (1) makes an intentional decision not to move to compel arbitration and (2) actively litigates the merits of a case for a prolonged...