Connell v. ByteDance, Inc. d/b/a/ TikTok
5:24-cv-07859
N.D. Cal.Jul 1, 2025Background
- Eighteen current/former ByteDance sales employees sued under the FLSA alleging unpaid overtime; defendant moved to compel arbitration based on onboarding documents.
- Plaintiffs fall into two primary groups: six who signed Confidentiality & Inventions Assignment Agreements (CIAAs) and eleven who signed Mutual Agreements to Arbitrate (MAAs); one plaintiff (Melgar) signed a CIAA and offer letter but no MAA.
- Central disputes: whether delegation clauses (sending gateway arbitrability questions to the arbitrator) are “clear and unmistakable,” and whether delegation/arbitration clauses are unconscionable or otherwise unenforceable under applicable state law (CA, NY, IL, TX).
- Court parsed issues by subgroup and governing state law, severing specific offending provisions where appropriate rather than invalidating entire arbitration clauses.
- Ruling: the court compelled arbitration for all but Melgar (whose CIAA incorporated an MAA that was not shown to exist), severed certain one-sided provisions (including equitable-relief carveouts and overbroad third‑party coverage) where needed, and stayed the entire case pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable law for arbitrability gateway | State law should govern where contract choice‑of‑law exists | FAA / federal arbitrability law governs absent clear designation otherwise | Applied federal arbitrability law (FAA governs) |
| Formation / illusoriness / mutuality | Arbitration promises lack mutuality and are illusory/lack consideration | Agreements were formed; arbitration clauses supported by consideration | Courts treated illusoriness as enforceability/unconscionability issue (for arbitrator if delegation valid); not a formation defect here |
| Whether delegation clauses are "clear and unmistakable" | Incorporation of AAA rules insufficient or ambiguous | Incorporation of AAA rules or explicit language is sufficient to delegate arbitrability | Incorporation of AAA rules held to be clear for most agreements; one CIAA (Wilbur) conflicted and did not clearly delegate |
| Unconscionability of delegation clauses (NY/IL/TX) | Clauses are adhesive, one‑sided, and impose prohibitive costs | Clauses are standard, costs covered, carveouts justified | Delegation clauses not unconscionable under NY, IL, or TX; arbitration compelled for those plaintiffs |
| Unconscionability of delegation clauses (California) | Equitable‑relief carveouts, non‑mutual third‑party coverage, and surprise render clauses unconscionable | Carveouts reflect legitimate business needs; provisions severable | Under CA the carveouts/overbroad terms made clauses unconscionable but court severed offending provisions and enforced remaining delegation clauses |
| Class/collective‑action waivers in MAAs | Waivers are unconscionable and unenforceable (esp. in FLSA collective) | Waivers enforceable under the FAA and Supreme Court precedent | Waivers enforceable; court decides waiver questions per agreement language, but precedent (Concepcion/Epic) upholds waivers |
| Whether Melgar agreed to arbitrate | CIAA and offer letter together create arbitration agreement | CIAA incorporated an MAA by reference—but no MAA was produced | Denied as to Melgar: no enforceable arbitration agreement proved (no MAA incorporated) |
| Stay pending arbitration | Plaintiffs argued some litigation should proceed | Defendant sought a stay of entire action | Court stayed entire case (including Melgar) for efficiency despite Melgar’s non‑arbitrability |
Key Cases Cited
- Rent‑A‑Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (FAA treats delegation clauses as separable agreements enforceable under general contract defenses)
- Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015) (incorporation of AAA rules can constitute clear and unmistakable delegation)
- Mohamed v. Uber Techs., Inc., 848 F.3d 1201 (9th Cir. 2016) (court should enforce delegation clauses that allocate arbitrability to arbitrator, even with specific carve‑outs)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules that invalidate class/collective‑action waivers)
- Epic Sys. Corp. v. Lewis, 584 U.S. 497 (2018) (Concepcion applies to collective‑action waivers in employment context)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (distinguishes formation challenges from enforceability challenges for arbitration clauses)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (contract formation disputes are for courts to decide despite arbitration clauses)
- Caremark, LLC v. Chickasaw Nation, 43 F.4th 1021 (9th Cir. 2022) (framework for resolving delegation vs. formation challenges)
- Reichert v. Rapid Invs., Inc., 56 F.4th 1220 (9th Cir. 2022) (party seeking to compel arbitration bears preponderance burden to show an agreement to arbitrate exists)
- Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000) (party resisting arbitration bears burden to show arbitrability unsuited)
- Lim v. TForce Logistics, LLC, 8 F.4th 992 (9th Cir. 2021) (procedural unconscionability: surprise/oppression in employment arbitration contexts)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (California mutuality and bilaterality requirements for employment arbitration agreements)