Yahoo! Inc. v. Iversen

• Decision Date: 11 October 2011
• Docket Number: Case No. 11–CV–03282–LHK.
• Parties: YAHOO! INC., Petitioner, v. Bryan IVERSEN, Respondent.
• Court: U.S. District Court — Eastern District of California

836 F.Supp.2d 1007

18 Wage & Hour Cas.2d (BNA) 528

YAHOO! INC., Petitioner,

v.Bryan IVERSEN, Respondent.

Case No. 11–CV–03282–LHK.

United States District Court,

N.D. California,

San Jose Division.

Oct. 11, 2011.

E. Jeffrey Grube, Esq., Chase W. Ensign, Paul Hastings et al., San Francisco, CA, for Petitioner.

Michael Lion Tracy, Law Offices of Michael Tracy, Irvine, CA, for Respondent.

ORDER DENYING PETITION TO COMPEL RESPONDENT BRYAN IVERSEN'S INDIVIDUAL CLAIMS TO ARBITRATION

LUCY H. KOH, District Judge.

Petitioner Yahoo! Inc. (“Yahoo”) petitions the Court pursuant to 9 U.S.C. § 4 of the Federal Arbitration Act (“FAA”) seeking to compel individual rather than class arbitration of Respondent Bryan Iversen's (“Iversen”) employment-related claims. Pursuant to Civil Local Rule 7–1(b), the Court finds this matter appropriate for resolution without oral argument and hereby VACATES the hearing and case management conference scheduled for October 13, 2011. Having considered the submissions of the parties, and for good cause shown, the Court hereby DENIES the petition.

I. BACKGROUND

This action arises from an employment dispute. Upon commencing employment with Yahoo, Iversen signed an arbitration agreement on September 17, 2007, in which he agreed as follows:

I acknowledge and confirm the mutual agreement that Yahoo! Inc. (“Yahoo!”) and I will resolve any employment-related disputes or controversies against Yahoo!, its affiliates, or any officer, director, employee, or agent of Yahoo! or its affiliates, including but not limited to claims related to harassment, discrimination, wrongful termination, retaliation, defamation, and compensation (including equity compensation), by binding arbitration under the then current American Arbitration Association (“AAA”) National Rules for the Resolution of Employment Disputes (“Rules”) and as provided by the Federal Arbitration Act.

Frick Decl. ¶ 6, ECF No. 5; Ex. to Frick Decl. at 2.

On June 23, 2011, Iversen filed a demand for arbitration with the AAA asserting claims on behalf of a class under the Private Attorneys General Act, Cal. Lab.Code § 2698 et seq., alleging: (1) unpaid overtime; (2) failure to provide itemized wage statements; (3) failure to provide compensation upon termination; (4) unfair business practices under California Business & Professions Code § 17200 et seq.; (5) break violations; (6) failure to keep records; (7) illegal deductions; and (8) minimum wage violations. See Ensign Decl. Ex. B, ECF No. 4–2. Yahoo asserts that the arbitration agreement does not permit arbitration of class claims and therefore brings this petition seeking to compel Iversen to arbitrate his claims individually. Iversen contends that the arbitration agreement allows class arbitration and furthermore requires that any questions of arbitrability be determined by the arbitrator, not the Court.

II. LEGAL STANDARD

The FAA applies to any contract affecting interstate commerce, including employment agreements. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). Enacted for the purpose of making valid and enforceable written agreements to arbitrate disputes, the FAA embodies “the basic precept that arbitration ‘is a matter of consent, not coercion.’ ” Stolt–Nielsen S.A. v. AnimalFeeds Int'l Corp., ––– U.S. ––––, 130 S.Ct. 1758, 1773, 176 L.Ed.2d 605 (2010) (quoting Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989)). In accordance with this principle, the Supreme Court has held that parties may agree to limit the issues subject to arbitration, Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985); to arbitrate according to specific rules, Volt, 489 U.S. at 479, 109 S.Ct. 1248; and to limit with whom a party will arbitrate its disputes, Stolt–Nielsen, 130 S.Ct. at 1773.Section 4 of the FAA ensures that “ ‘private agreements to arbitrate are enforced according to their terms,’ ” Stolt–Nielsen, 130 S.Ct. at 1773 (quoting Volt, 489 U.S. at 479, 109 S.Ct. 1248), by expressly authorizing a party to an arbitration agreement to petition a United States district court for an order directing that “arbitration proceed in the manner provided for in such agreement,” 9 U.S.C. § 4.

Under the FAA, arbitration agreements “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. Arbitration is a matter of contract, and the FAA places arbitration agreements “on an equal footing with other contracts.” Rent–A–Center, West, Inc. v. Jackson, –––U.S. ––––, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010). The interpretation of an arbitration agreement is therefore generally a matter of state law, Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 129 S.Ct. 1896, 1901–02, 173 L.Ed.2d 832 (2009), unless application of state-law rules would “stand as an obstacle to the accomplishment of the FAA's objectives,” AT & T Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1748, 179 L.Ed.2d 742 (2011).

III. ANALYSIS

Neither party disputes that there is a valid and enforceable arbitration agreement or that Iversen's claims, were he pursuing them solely on his own behalf, fall within the scope of the agreement. Rather, the questions before the Court are the same ones that confronted the Supreme Court in Green Tree Financial Corporation v. Bazzle, 539 U.S. 444, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003) (plurality): (1) whether the arbitrability of class claims under the parties' contract should be determined by the court or the arbitrator, and (2) what standard the appropriate decision maker should apply in determining whether the contract allows class arbitration. See Stolt–Nielsen, 130 S.Ct. at 1771 (discussing Bazzle ). The Court discusses each in turn.

A. Whether the Arbitrator or the Court Should Decide the Arbitrability of Class Claims

Believing this case to be squarely controlled by Stolt–Nielsen, Yahoo insists there is no open matter of contract interpretation and that referral to an arbitrator to decide the arbitrability of class claims would therefore be both unnecessary and improper. Contrary to Yahoo's belief, Stolt–Nielsen provides little, if any, guidance to the dispute at hand. Stolt–Nielsen held that “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” 130 S.Ct. at 1775 (emphasis in original). The Supreme Court took pains to underscore that the parties in Stolt–Nielsen “selected a panel or arbitrators and stipulated that the arbitration clause was ‘silent’ with respect to class arbitration.” Id. at 1766;accord id. at 1775 (noting that “the parties concurred that they had reached ‘no agreement’ on [the arbitrability of class-wide claims]”); id. at 1776 (again noting parties' stipulation); id. at 1776 n. 10 (same). Because the parties in Stolt–Nielsen stipulated that they had reached no agreement on the arbitrability of class-wide claims, the Supreme Court had “no occasion to decide what contractual basis may support a finding that the parties agreed to authorize class-action arbitration,” id. at 1776 n. 10, nor to decide the threshold question of whether the court or the arbitrator should decide arbitrability.

Had Yahoo and Iversen stipulated that there was no agreement on the issue of class arbitration, as did the parties in Stolt–Nielsen, then Stolt–Nielsen would indisputably control. See id. at 1776. The parties, however, have made no such stipulation. Indeed, whether the arbitration agreement between Yahoo and Iversen is “silent” on the availability of class arbitration is precisely what lies at the heart of this dispute.

Iversen contends that the arbitration agreement is not “silent” but rather permits class arbitration by providing that arbitration will be conducted “under the then current American Arbitration Association [ (AAA) ] National Rules for the Resolution of Employment Disputes,” which as of October 8, 2003 includes the AAA Supplementary Rules for Class Arbitration (“AAA Supplementary Rules”). See Opp'n Br., Ex. A at 1. The AAA Supplementary Rules state that they “shall apply to any dispute arising out of an agreement that provides for arbitration pursuant to any of the rules of the American Arbitration Association (‘AAA’) where a party submits a dispute to arbitration on behalf of or against a class or purported class, and shall supplement any other applicable AAA rules.” Id. The current dispute clearly arises out of an agreement that provides for arbitration pursuant to AAA rules, and Iversen has submitted a dispute to arbitration on behalf of a class. As such, Iversen argues that the terms of the contract clearly incorporate the AAA Supplementary Rules, reflecting the parties' intent to authorize class-wide arbitration of claims.

Yahoo disagrees with Iversen's interpretation of the contract, asserting that the arbitration agreement is “silent” regarding class arbitration because it “makes no reference to class arbitration.” Br. at 2. Although Yahoo believes the agreement's lack of reference to class arbitration is dispositive under Stolt–Nielsen, the Supreme Court explained that it used the term “ ‘silent’ in the sense that [the parties] had not reached any agreement on the issue of class arbitration,” Stolt–Nielsen, 130 S.Ct. at 1768, “not simply ... that the clause made no express reference to class arbitration,” id. at 1766. As another court in this district recently explained, “[t]he Supreme Court has never held that a class arbitration clause must explicitly mention that the parties agree to class arbitration in order for a decisionmaker to conclude that the parties consented to class arbitration.... [T]he failure to mention class arbitration in the arbitration clause itself does not necessarily...