Levin v. Caviar, Inc.
146 F. Supp. 3d 1146
N.D. Cal.2015Background
- Plaintiff (a Caviar courier) brought a putative class action and a representative PAGA claim alleging misclassification as an independent contractor and violations of Cal. Labor Code §§ 2802 and 226(a).
- Plaintiff attended onboarding in Dec. 2014, clicked to accept Caviar’s online "Courier Terms and Conditions," and performed deliveries beginning Dec. 16, 2014; he later re-accepted identical terms via an app update.
- The Courier Terms contain a broad arbitration clause requiring AAA arbitration, a class/PAGA-waiver, and a severability clause; it allocates some filing fees to couriers and states each party pays its own attorneys’ fees unless law provides otherwise.
- Defendant moved to compel individual arbitration and to dismiss; Plaintiff opposed on grounds that (1) he is a transportation worker exempt from the FAA, (2) the PAGA waiver is unenforceable, (3) the clickwrap consent was invalid, and (4) the arbitration clause is unconscionable.
- The court granted the motion to compel arbitration of Plaintiff’s individual claims, found the PAGA waiver unenforceable under state law, severed the PAGA waiver, and deferred ruling on whether the PAGA claim itself is arbitrable pending additional briefing on whether arbitrability should be decided by the AAA arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FAA §1 exemption for "transportation workers engaged in interstate commerce" | Velasquez is a transportation worker because couriers facilitate delivery of goods that may have originated interstate | Narrow construction of §1; no evidence courier made interstate trips or that employer operates in interstate transport | Court rejects Plaintiff's §1 exemption; local deliveries do not fall within the §1 exemption here |
| Validity of clickwrap assent | Clickwrap invalid because terms were hyperlinked and not displayed on same screen and there was no tracking of viewing | Clickwrap is enforceable; user had to click to become available and evidence shows repeated clicks indicating assent | Court finds clickwrap formation valid (clicks to "Become Available" constituted assent) |
| Unconscionability and PAGA waiver | Agreement procedurally and substantively unconscionable; PAGA waiver voids arbitration clause | Agreement meets Armendariz requirements; severability clause allows striking PAGA waiver and enforcing remainder | Court finds contract procedurally unconscionable but only the PAGA waiver substantively unconscionable; it severs the PAGA waiver and enforces arbitration of individual claims |
| Arbitrability of PAGA representative claim | PAGA claim should not be waived; unclear whether it must be litigated in court or arbitrated | Agreement governs disputes under AAA rules; parties may have agreed to arbitrate disputes including PAGA claims | Court defers; directs 5‑page letter briefs on whether arbitrability of PAGA claim should be decided by the AAA arbitrator |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preempts state rules that disproportionately disfavor arbitration agreements)
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (U.S. 2001) (narrow construction of §1 FAA exemption for transportation workers)
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (PAGA waiver unenforceable; left question of arbitrability of PAGA claims unresolved)
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (PAGA representative‑claim waivers violate public policy)
- Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal.4th 83 (Cal. 2000) (requirements for lawful employment arbitration agreements under California law)
- Palcko v. Airborne Express, Inc., 372 F.3d 588 (3d Cir. 2004) (workers closely related to interstate transport can fall within §1 exemption)
- Landis v. North American Co., 299 U.S. 248 (U.S. 1936) (district court’s discretion to stay proceedings pending resolution of related matters)