Cobarruviaz v. Maplebear, Inc.
143 F. Supp. 3d 930
N.D. Cal.2015Background
- Plaintiff Dominic Cobarruviaz (and putative class) worked as Instacart independent contractors and sued asserting they were employees under the FLSA and various state laws; California plaintiffs also asserted a representative PAGA claim.
- Each worker electronically signed an identical Independent Contractor Agreement containing a JAMS-administered arbitration clause; the clause required arbitration at JAMS San Francisco and included fee-splitting and a prevailing-party fee-shifting term.
- JAMS declined to administer the arbitration unless the parties amended the agreement to comply with JAMS Minimum Standards (which prohibit the challenged fee-splitting and limit employee costs); Plaintiffs refused to amend.
- Instacart moved to compel arbitration; the Court was asked to decide (1) whether arbitration should be compelled despite JAMS’ refusal, (2) who decides arbitrability and class arbitrability, (3) unconscionability of specific terms, and (4) whether PAGA claims are arbitrable.
- The Court found the JAMS selection was not an "integral" forum term that defeats arbitration, but (after severing unconscionable fee provisions) compelled individual arbitration and reserved the PAGA representative claim for the court while staying the litigation pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of chosen forum's refusal to administer (JAMS failure) | JAMS’ refusal defeats arbitration because parties agreed to JAMS | Even if JAMS declines, arbitration remains enforceable under other rules/venues | JAMS selection not "integral"; failure to accept does not bar arbitration (arbitration compelled) |
| Who decides arbitrability (delegation clause) | Delegation clause delegates arbitrability to arbitrator | Court should decide unless delegation is clear and unmistakable | Delegation language ambiguous due to severability clause; court decides arbitrability |
| Unconscionability of arbitration terms (procedural & substantive) | Agreement is adhesive and contains hidden and one-sided terms (forum, fee-splitting, fee-shifting) | Terms are lawful or can be interpreted to avoid unfairness | Procedural unconscionability: moderate (adhesive contract). Substantive: fee-splitting and prevailing-party fee-shifting are unconscionable; forum clause not unconscionable here. Court severs offending provisions and enforces remaining arbitration clause |
| Class-wide arbitration availability | Agreement allows class arbitration or is ambiguous so arbitrator should decide | Agreement does not provide clear consent to class arbitration; court should decide | Court (gateway) decides there is no contractual basis for class arbitration; arbitration limited to individual claims |
| Arbitrability of representative PAGA claim | PAGA claim should be arbitrated with individual claims | PAGA representative claims implicate non-parties (state) and are not waived by the agreement | Court holds PAGA representative claim is not arbitrable here; it remains in court (but litigation stayed pending arbitration outcome) |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (generally courts decide enforceability unless parties clearly delegate to arbitrator)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (delegation requires clear and unmistakable evidence)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (gateway questions of arbitrability are for courts absent clear delegation)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (parties must clearly consent to class arbitration; it cannot be presumed)
- Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83 (2000) (California unconscionability framework and severance principles for employment arbitration)
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (2014) (PAGA representative claims are not waivable in a manner that impairs public enforcement)
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (discusses arbitrability and representative PAGA claims and class/representative limits)