Ortiz v. Hobby Lobby Stores, Inc.
52 F. Supp. 3d 1070
E.D. Cal.2014Background
- Ortiz filed a putative class action against Hobby Lobby Stores, Inc. alleging unpaid wages, missed minimum wages, and PAGA penalties based on California Labor Code and FLSA; she worked for Hobby Lobby from 2010 to 2013.
- Defendant moves to dismiss under Rule 12(b)(6) or, in the alternative, to compel arbitration and stay proceedings, arguing all claims fall under an arbitration agreement.
- A Mutual Arbitration Agreement dated November 11, 2010, signed by Ortiz, requires arbitration of all employment-related disputes and bans class, collective, or joint actions.
- Plaintiff disputes the agreement’s existence and validity, including authentication, unconscionability, and scope.
- Court undertakes threshold analysis to determine if a valid arbitration agreement exists and whether the dispute falls within its scope.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of a valid arbitration agreement | Ortiz disputes validity and authentication of the agreement | Hobby Lobby submitted a signed arbitration agreement with authentication via declaration | Valid arbitration agreement found; authenticated |
| Arbitration agreement encompasses the disputes | Disputes may not all fall under arbitration; PAGA and class claims excluded | All employment-related disputes are within the agreement's scope | Disputes fall within scope; all class/representative claims subject to arbitration or waived |
| Concerning unconscionability and PAGA waiver | Arbitration is procedurally unconscionable and PAGA waiver violates public policy | Concepcion preempts state rules; PAGA waiver enforceable under FAA | Arbitration agreement not substantively unconscionable; representative PAGA waiver enforceable under FAA |
| Remedy for the dispute | If arbitrable, claims should proceed in court or be stayed | All claims are arbitrable; court should dismiss or stay pending arbitration | All claims subject to arbitration; action dismissed without prejudice |
Key Cases Cited
- Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (9th Cir. 2000) (determine existence of arbitration agreement; applies state contract principles with FAA policy)
- Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469 (9th Cir. 1991) (arbitrability framework and enforcement of arbitration agreements)
- Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83 (Cal. 2000) (unconscionability standard for arbitration agreements (procedural and substantive))
- Kilgore v. KeyBank, Nat’l Ass’n, 673 F.3d 947 (9th Cir. 2012) (sliding scale for unconscionability; balance procedural/substantive factors)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules that prohibit class action waivers; favors arbitration)
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (Iskanian rule against representative PAGA waivers; FAA preemption considerations)