1 2 3 4 BRIAN L. JOHNSRUD, State BarNo. 184474 PATRICK SHERMAN, State Bar No. 229959 MAGGIE W. TRINH, State Bar No. 279604 CURLEY, HURTGEN & JOHNSRUD LLP 4400 Bohannon Drive, Suite 230 Menlo Park, CA 94025 Telephone: 650.600.5300 Facsimile: 650.323.1002 5 6 Attorneys for Defendant GOGGLE INC. 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 IN AND FOR THE COUNTY OF SANTA CLARA 10 11 LORETTA LEE, Plaintiff, 12 13 Case No. 18CV323651 v. 14 GOGGLE, INC. and DOES 1-25, 15 Defendants. MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT GOOGLE INC.'S PETITION TO COMPEL ARBITRATION DATE: TIME: DEPT: July 19,2018 9:00 a.m. 13 16 17 18 19 20 21 22 23 24 25 26 27 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 TABLE OF CONTENTS 2 Page No. 3 I. INTRODUCTION ................................................................................................................ 1 4 II. FACTS .................................................................................................................................. 2 5 A. Loretta Lee's Background Prior To Joining Google ................................................ 2 6 B. Lee Interviews With Google And Receives An Offer Letter That Specifically References And Encloses The Arbitration Agreement ............................................. 2 C. Lee Refuses To Honor Her Arbitration Agreement And Instead Files Her Complaint With This Court ...................................................................................... 3 7 8 9 III. LEGAL ARGUMENT .......................................................................................................... 4 10 A. The FAA And CAA Favor Enforcement Of The Arbitration Agreement ................ 4 11 B. The Agreement Encompasses All Of Lee's Claims ................................................. 5 12 C. The Agreement Complies With Armendariz ............................................................ 5 13 D. Lee Cannot Establish Any Basis To Revoke The Agreement .................................. 7 14 1. Lee Cannot Establish Procedural Unconscionability .................................... 7 15 2. Lee Cannot Establish That The Agreement Is Substantively Unconscionable ............................................................................................. 9 16 a. The Provision Regarding SOX Claims Is Not Unconscionable ..... 10 b. The Prevailing Party Attorneys' Fee Provision Is Not Unconscionable Because It Does Not Apply Where Prohibited By Law ............................................................................................ 12 17 18 19 E. To The Extent Necessary, The Court Can And Should Sever Any Unconscionable Provision In The Agreement ........................................................ 13 F. The Court Should Dismiss Or Stay This Litigation Pending Arbitration ............... 14 20 21 22 IV. CONCLUSION ................................................................................................................... 14 23 24 25 26 27 28 CURLEY, HURTGEN & JOHNSRUD LLP CoUNSELORS AT LAW MENLO PARK CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 TABLE OF AUTHORITIES 2 Page No(s). 3 Cases 4 24 Hour Fitness v. Super. Ct. 66 Cal. App. 4th 1199 (1998) ....................................................................................................... 5 5 6 7 American Software v. Ali 46 Cal. App. 4th 1386 (1996) ..................................................................................................... 11 Anderson v. Savin Corp. 206 Cal. App. 3d 356 (1988) ........................................................................................................ 8 8 9 10 Armendariz v. Foundation Health 24 Cal. 4th 83 (2000) ...................................................................................................... 5, 6, 7, 13 AT&T Mobility v. Concepcion 131 S. Ct. 1740 (2011) .................................................................................................................. 7 11 12 13 Baltazar v. Forever 21 62 Cal. 4th 1237 (2016) ........................................................................................................ 7, 8, 9 Beard v. Santander 2012 WL 1292576 (E.D. Cal. Apr. 16, 2012) ............................................................................ 11 14 15 16 Blackwell v. Bank ofAmerica 2012 WL 1229673 (D. S.C. Mar. 22, 2012) ................................................................................ 11 Bolter v. Super. Ct. 87 Cal. App. 4th 9001 (200 1) ....................................................................................................... 13 17 18 19 Brookwood v. Bank ofAm. 45 Cal. App. 4th 1667 (1996) ....................................................................................................... 5 Circuit City Stores v. Adams 532 u.s. 105 (2001) ...................................................................................................................... 4 20 21 22 Dotson v. Amgen 181 Cal. App. 4th 975 (2010) ................................................................................................... 7, 8 First Options of Chicago v. Kaplan 514 u.s. 938 (1995) ...................................................................................................................... 7 23 24 25 Harper v. Ultimo 113 Cal. App. 4th 1402 (2003) ................................................................................................... 13 Henderson v. Masco Framing 2011 WL 3022535 (D. Nev. July 22, 2011) ............................................................................... 11 26 27 Holmes v. Air Liquide 2012 WL 267194 (S.D. Tex. Jan. 30, 2012) ............................................................................... 11 28 CURLEY, HURTGEN & JOHNSRUD LLP AT LAW 11 CASE NO. 18CV323651 COUNSELORS MENLO PARK MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 TABLE OF AUTHORITIES (cont'd) 2 Page No(s). 3 4 5 Holmes v. City ofLos Angeles 117 Cal. App. 3d 212 (1981) ........................................................................................................ 8 Jones v. Humanscale 130 Cal. App. 4th 401 (2005) ..................................................................................................... 13 6 7 8 Khazin v. TD Ameritrade 2014 WL 940703 (D.N.J. March 11, 2014) ................................................................................ 11 Khraibut v. Chahal 2016 WL 1070662 (1\J".D. Cal. March 18, 2016) ......................................................................... 12 9 10 11 Lagatree v. Luce, Forward 74 Cal. App. 4th 110 5 (1999) ....................................................................................................... 8 1 Landgraf v. US! Film Prods. 511 u.s. 244 (1994) .................................................................................................................... 12 12 13 14 Lane v. Francis Capital 224 Cal. App. 4th 676 (2014) ....................................................................................................... 9 Little v. Auto Stiegler 29 Cal. 4th 1064 (2003) .............................................................................................................. 13 15 16 17 Mejia v. EMC Mortg. Corp. 2012 WL 367364 (C.D. Cal. Feb. 2, 2012) ................................................................................ 11 Moncharsh v. Heily & Blase 3 Cal. 4th 1 (1992) ........................................................................................................................ 4 18 19 20 Mortensen v. Bresnan Comm. 722 F.3d 1151 (9th Cir. 2013) ...................................................................................................... 4 Pac. Inv. Co. v. Townsend 58 Cal. App. 3d 1 (1976) .............................................................................................................. 5 21 22 23 Pearson Dental v. Super. Ct. 48 Cal. 4th 665 (2010) .......................................................................................................... 10, 13 Peng v. First Republic Bank 219 Cal. App. 4th 1462 (2013) ................................................................................................. 8, 9 24 25 26 Pinnacle Museum v. Pinnacle Market Dev. 55 Cal. 4th 223 (2012) .......................................................................................................... 4, 7, 9 Roman v. Super. Ct. 172 Cal. App. 4th 1462 (2009) ................................................................................................. 8, 9 27 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK Ruhe v. Masimo Corp. 2011 WL 4442790 (C.D. Cal. Sept. 16, 2011) ........................................................................... 11 111 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION TABLE OF AUTHORITIES (cont'd) 1 2 Page No(s). 3 4 5 Saika v. Gold 49 Cal. App. 4th 1074 (1996) ....................................................................................................... 4 Serafin v. Balco Properties 235 Cal. App. 4th 165 (2015) ..................................................................................................... 13 6 7 8 Sonic-Calabasas A, Inc. v. Moreno 57 Cal. 4th 1109 (2013) .......................................................................................................... 1, 10 Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp. 559 u.s. 662 (2010) ...................................................................................................................... 1 9 10 11 Taylor v. Fannie Mae 839 F. Supp. 2d 259 (D.D.C. 2012) ...................................................................................... 10, 11 Thinket Ink v. Sun Microsystems 368 F.3d 1053 (9th Cir. 2004) .................................................................................................... 14 12 13 14 Trivedi v. Curexo Tech. 189 Cal. App. 4th 387 (2010) ............................................................................................... 12, 13 United Transp. Union v. S. Cal. Rapid Transit 7 Cal. App. 4th 804 (1992) ........................................................................................................... 5 15 16 17 Weller v. HSBC Mortg. Servs. 971 F.Supp.2d 1072 (D. Colo. Sept. 11, 2013) .......................................................................... 11 Western Security Bank v. Super. Ct. 15 Cal. 4th 232 (1997) ................................................................................................................ 12 18 Statutes 19 18 U.S.C. § 1514A(e)(2) ................................................................................................................. 10 20 Cal. Civ. Code§ 1643 ....................................................................................................................... 9 21 Cal. Civ. Code§ 1670.5(a) ................................................................................................... 2, 11, 13 22 Cal. Civ. Code§ 3541 ..................................................................................................................... 10 23 Cal. Code Civ. Proc. § 1280(a) ......................................................................................................... 4 24 Cal. Code Civ. Proc. § 1281.4 ........................................................................................................ 14 25 26 27 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK lV CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 I. 2 INTRODUCTION Defendant Google Inc. petitions the Court for an Order compelling Plaintiff Loretta Lee to 3 arbitrate the employment claims alleged in her Complaint. 1 Lee refuses to honor the arbitration 4 agreement ("Agreement") she signed at the outset of her employment with Google. Like most 5 large employers, Google uses arbitration for "lower costs, greater efficiency and speed, and the 6 ability to choose expert adjudicators to resolve specialized disputes." See Stolt-Nielsen S.A. v. 7 Animal Feeds Int'l Corp., 559 U.S. 662, 685 (2010); Sonic-Calabasas A, Inc. v. Moreno, 57 Cal. 8 4th 1109, 1141 (20 13) (remarking that the benefits of arbitration are "streamlined proceedings 9 and expeditious results"); I.S. Szalai, "The Widespread Use of Workplace Arbitration Among 10 America's Top 100 Companies," Employee Rights Advocacy Institute (September 27, 2017). 2 11 Plaintiff Lee is well-educated and was gainfully employed at the time Google offered her 12 a job in November 2008. Lee now claims she was surprised by the Agreement, but that assertion 13 is without merit. While she may have forgotten about the Agreement in 2018, she cannot claim 14 she was surprised back in 2008 when she signed it. Her two-page offer letter specifically 15 referenced and enclosed a copy of the Agreement, and noted that the Agreement "provides for 16 arbitration of all disputes arising out of your employment." Lee was given plenty of time to 17 review the Agreement prior to signing it. The Agreement is plainly-labelled, called out in ALL 18 CAPS, and has key provisions emphasized in bold and italics. Lee neither asked questions about, 19 nor objected to, the Agreement, and simply accepted her offer to join Google. Under these facts, 20 Lee will not be able to show any evidence of procedural unconscionability at the time she 21 voluntarily accepted Google' s offer. As to alleged substantive unconscionability, Lee challenges two provisions, neither of 22 23 which is unconscionable. First, she claims that the agreement to arbitrate any claims under the 24 Sarbanes-Oxley Act (SOX) is unenforceable and substantively unconscionable (even though she 25 does not assert a SOX claim). The provision requiring arbitration of SOX claims was lawful and 26 27 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 1 Google denies Ms. Lee's claims and allegations, and will address them at the proper time in the proper forum. 2 Third parties, including those who witnessed Ms. Lee's conduct and who are not accused of any wrongdoing, have their own privacy interests that are best served in arbitration in accordance with Ms. Lee's Agreement. 1 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 enforceable at the time Ms. Lee accepted the Agreement in December 2008. While arbitration of 2 SOX claims was later prohibited by the Dodd-Frank Act in 2010, the provision Lee challenges 3 was enforceable at the relevant time, when the contract was made. See Cal. Civ. Code 4 § 1670.5(a) ("If the court as a matter of law finds the contract or any clause of the contract to 5 have been unconscionable at the time it was made the court may refuse to enforce the contract") 6 (emphasis added). To the extent necessary, this clause can easily be severed. 7 Second, Lee takes issue with the prevailing party attorneys' fees provision, but by its own 8 terms, that fee shifting provision applies "except as prohibited by law." Accordingly, the 9 prevailing party fee provision should be interpreted as applying only where lawful, given the 10 Agreement's express terms. No other reasonable interpretation of the plain language of the 11 provision exists. In short, this Court should grant Google' s petition to compel arbitration and 12 dismiss or stay these judicial proceedings. 13 II. FACTS 14 A. 15 Google recruiter Adam Deer contacted Loretta Lee by email on August 5, 2008, to see if 16 she was interested in discussing a potential role at Google. (Declaration of Adam Deer ~ 2). Ms. 17 Lee responded to Deer's email that same day, stating that she was currently employed though 18 always looking for great new opportunities. (!d.) According to Lee's resume, at that time she 19 was working as the CEO and Software Engineer of Coroll Technologies and as a Software 20 Engineer at Space Computer Corporation. (!d., Ex. A). She previously earned a Bachelor's 21 Degree in Electrical Engineering and Computer Science from the University of California, 22 Irvine. (!d.) Deer spoke with Lee about her interest in a potential role at Google and helped 23 prepare her for in-person interviews. (!d.) 24 25 26 B. Loretta Lee's Background Prior To Joining Google. Lee Interviews With Google And Receives An Offer Letter That Specifically References And Encloses The Arbitration Agreement. In the Fall of 2008, Lee participated in several in-person interviews for a position as a 27 Software Engineer. Google offered Lee employment on November 12, 2008, as reflected in her 28 offer letter. (!d. CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK ~ 3, Ex. C). Lee's offer letter specifically stated: 2 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 To protect the interests of Google and its clients, all employees are required to read and sign the enclosed At Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement as a condition of employment with Google. This Agreement, which provides for arbitration of all disputes arising out of your employment, is enclosed for your review; you will be required to sign it on your first day of employment. (!d.). 2 3 4 5 Lee accepted the Agreement through her electronic signature on December 8, 2008. (Declaration 6 of Emily Takashima W"'ilson ~ 3, Exs. A & B). The Agreement includes a plainly-labeled 7 arbitration provision, set forth in Section 15 of the Agreement. 8 provision covers all claims arising out of or relating to Lee's employment. It provides: 9 (!d.~ 3, Ex. A). The arbitration I agree that any and all controversies, claims, or disputes with anyone (including the Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such or otherwise) ... arising out of, relating to, or resulting from my employment with the Company ... shall be subject to binding arbitration administered by Judicial Arbitration and Mediation Services, Inc. ("JAMS"), pursuant to its Employment Arbitration Rules & Procedures (the "JAMS Rules"). 10 11 12 13 14 (!d., Ex. A, §15(a)) (original in ALL CAPS throughout). The arbitration provision is expressly 15 mutual, providing that: "I further understand that this agreement to arbitrate also applies to any 16 disputes that the Company may have with me." (!d.) The Agreement provides for arbitration 17 with JAMS pursuant to its Employment Arbitration Rules & Procedures. (!d. ~ 3, Ex. A, § 15(b)). 18 The Agreement provides that the Company will pay for any administrative or hearing fees 19 charged by the arbitrator or JAMS, except that Lee will pay filing fees equal to what she would 20 have paid to file her Complaint in court. (!d.) The Agreement also provides that "the arbitrator 21 shall award attorneys' fees and costs to the prevailing party, except as prohibited by law." (!d.) 22 23 24 c. Lee Refuses To Honor Her Arbitration Agreement And Instead Files Her Complaint With This Court. Before Lee filed her Complaint in this Court, Google' s counsel provided Lee with a copy 25 of the Agreement. (Declaration of Brian Johnsrud, Ex. A). Despite the Agreement's arbitration 26 provision, Lee nonetheless filed this action alleging harassment and other claims relating to her 27 employment. See Complaint at~ 44 alleging that Lee was subjected to "hostile work 28 environment because of her sex/gender" and Complaint at~ 52 alleging that Google engaged in CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 3 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 "unlawful employment practices." Counsel for the parties subsequently met and conferred 2 regarding Lee's challenges to the Agreement, and were unable to resolve their dispute regarding 3 the enforceability of the Agreement. (Johnsrud Decl., Exs. Band C). 4 III. 5 LEGAL ARGUMENT Federal and CaHfornia courts have repeatedly emphasized the strong public policy 6 arguments in favor of arbitration. See Mortensen v. Bresnan Comm., 722 F .3d 1151, 1160 (9th 7 Cir. 2013) ("the FAA's purpose is to give preference (instead of mere equality) to arbitration 8 provisions"); Pinnacle Museum v. Pinnacle Market Dev., 55 Cal. 4th 223, 235, fn. 4 (2012) ("The 9 CAA's comprehensive statutory scheme also expresses a strong public policy in favor of 10 arbitration ... "). Given its favored status, courts "indulge every intendment to implement and give 11 effect to arbitration proceedings." Saika v. Gold, 49 Cal. App. 4th 1074, 1076 (1996). As shown 12 below, this Court should compel arbitration under the Federal Arbitration Act (FAA) and the 13 California Arbitration Act (CAA). 14 A. 15 The California Arbitration Act sets forth "a comprehensive scheme regulating private The FAA And CAA Favor Enforcement Of The Arbitration Agreement. 16 arbitration in this state" through which the Legislature expressed a "strong public policy in favor 17 of arbitration as a speedy and relatively inexpensive means of dispute resolution." Moncharsh v. 18 Heily & Blase, 3 Cal. 4th 1, 9 (1992). The CAA provides that pre-dispute arbitration agreements 19 between employers and employees are enforceable. See Cal. Code Civ. Proc. § 1280(a). 20 The Federal Arbitration Act also applies to the Agreement. The Supreme Court has "been 21 clear in rejecting the supposition that the advantages of the arbitration process somehow 22 disappear when transferred to the employment context." Circuit City Stores v. Adams, 532 U.S. 23 105, 123 (2001). In Circuit City v. Adams, the Supreme Court explained that "what Congress 24 intended when it legislated to cover contracts 'involving commerce' ... [was to provide] that 25 coverage would extend to the outer constitutional limits under the Commerce Clause." 532 U.S. 26 105, 134 (2001). The Supreme Court has "interpreted§ 2's 'involving commerce' phrase as 27 implementing Congress' intent 'to exercise [its] commerce power to the full."' Id at 112. 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 4 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 Here, the Agreement plainly evidences a transaction in interstate commerce. The 2 Agreement is part of the employment contract through which Google hired Lee to work as a 3 Software Engineer on Google's products and services, which are used in interstate transactions. 4 (Wilson Dec. , 2). Further, the Agreement is part of an employment contract through which the 5 parties agreed to arbitrate any disputes through the JAMS, a national provider of arbitration 6 services. (!d., Ex. A, §15(b)). In short, the FAA applies to the Agreement. 7 B. 8 The scope of matters covered by an arbitration agreement is determined by the agreement 9 The Agreement Encompasses All Of Lee's Claims. itself. See Pac. Inv. Co. v. Townsend, 58 Cal. App. 3d 1, 10 (1976). "Doubts as to whether an 10 arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties 11 to arbitration." United Transp. Union v. S. Cal. Rapid Transit, 7 Cal. App. 4th 804, 808 (1992). 12 Here, the parties agreed to arbitrate "any and all controversies, claims, or disputes ... arising out 13 of, relating to, or resulting from my employment with the Company." (Wilson Dec. Ex. A). See 14 24 Hour Fitness v. Super. Ct., 66 Cal. App. 4th at 1205 (plaintiffs sexual harassment claim fell 15 within arbitration agreement encompassing "every kind or type of dispute"); Brookwood v. Bank 16 ofAm., 45 Cal. App. 4th 1667, 1672, 1674 (1996) (agreement providing that "any dispute, 17 controversy or claim relating to this [employment] Agreement" encompassed plaintiffs 18 discrimination claims). The Agreement encompasses the claims alleged in Lee's Complaint, all 19 of which arise from her employment with Google. (See Complaint,, 1-7, 44, 51, 56, 61, 66, 71, 20 76, 80, 87, 93, 102, 109). 21 c. 22 In Armendariz v. Foundation Health, 24 Cal. 4th 83 (2000), the California Supreme Court The Agreement Complies With Armendariz. 23 held that, for an arbitration agreement to lawfully encompass statutory discrimination claims, it 24 must provide for: (1) a neutral arbitrator; (2) adequate discovery; (3) a written award; (4) all of 25 the types of relief that would otherwise be available in court; and (5) the employer to pay the 26 costs unique to arbitration. Armendariz, 24 Cal. 4th at 102. The Agreement, which incorporates 27 the JAMS Rules, fully complies with Armendariz, as follows: 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 5 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 First, the Agreement provides for use of a neutral arbitrator. (Wilson Dec. Ex. A at 2 §15(a)). The Agreement also provides for a neutral arbitrator by selecting and incorporating the 3 JAMS Rules, as they provide: "The Arbitration shall be conducted by one neutral Arbitrator." 4 (Request for Judicial Notice, Ex. A, JAMS Rule 7(a) "Number and Neutrality of Arbitrators"). 5 Second, the Agreement provides for adequate discovery, as it provides that "the arbitrator 6 shall administer and conduct any arbitration in accordance with California law, including the 7 California Code of Civil Procedure." (Wilson Dec. Ex. A, §15(b)). Likewise, the JAMS Rules 8 require "an initial exchange of all relevant, non-privileged documents, including, without 9 limitation, copies of all documents in their possession or control on which they rely in support of 10 their positions" and permit depositions. (RJN, Ex. A, JAMS Rule 17, "Exchange of 11 Information"). 12 Third, the Agreement and the JAMS Ru1es provide for a written award. The Agreement 13 provides: "I agree that the decision of the arbitrator shall be in writing." (Wilson Dec. Ex. A, 14 §15(b)). The JAMS Rules likewise provide that the award "shall consist of a written statement 15 signed by the Arbitrator regarding the disposition of each claim and the relief, if any, as to each 16 claim ... [and] a concise written statement of the reasons for the Award, stating the essential 17 findings and conclusions on which the Award is based." (RJN, Ex. A, JAMS Rule 24(h), 18 "Awards"). This procedure is sufficient to "reveal, however briefly, the essential findings and 19 conclusions on which the award is based." Armendariz, 24 Cal. 4th at 107. 20 Fourth, the Agreement and the JAMS Rules provide for all types of relief otherwise 21 available in court. The Agreement provides: "I also agree that the Arbitrator shall have the power 22 to award any remedies, including attorneys' fees and costs, available under applicable law, and 23 that the arbitrator shall award attorneys' fees and costs to the prevailing party except as prohibited 24 by law." (Wilson Dec. Ex. A, §15(b)). Likewise, the JAMS Rules provide that "[t]he Arbitrator 25 may grant any remedy or relief that is just and equitable and within the scope of the Parties' 26 agreement, including, but not limited to, specific performance of a contract or any other equitable 27 or legal remedy." (RJN, Ex. A, JAMS Rule 24(c), "Awards"). Accordingly, the Agreement and 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 6 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 the JAMS Rules satisfy the Armendariz requirement that all statutory remedies be available to the 2 parties. 3 Fifth, the Arbitration provision does not obligate Lee to pay costs unique to the arbitral 4 forum. With regard to costs, the Agreement provides: "the company will pay for any 5 administrative or hearing fees charged by the arbitrator or JAMS except that I shall pay any filing 6 fees associated with any arbitration I initiate, but only so much of the filing fees as I would have 7 instead paid had I filed a complaint in a court of law." (Wilson Dec. Ex. A §15(b)). The JAMS 8 Rules likewise require the employer to pay the costs unique to arbitration. (RJN, Ex. A, JAMS 9 Rule 31 (c), "Fees"). Therefore, the Agreement and the JAMS Rules require Google to pay the 10 costs unique to arbitrating Lee's claims. In sum, the Agreement complies with Armendariz and 11 should be enforced. 12 D. 13 Lee claims that the Agreement is invalid and unenforceable. An agreement to arbitrate Lee Cannot Establish Any Basis To Revoke The Agreement. 14 may be "invalidated by generally applicable contract defenses, such as fraud, duress, or 15 unconscionability, but not by defenses that apply only to arbitration or that derive their meaning 16 from the fact that an agreement to arbitrate is at issue." AT&T Mobility v. Concepcion, 131 S. Ct. 17 1740, 1746 (2011). Whether grounds for revocation exist is a question of state law. First 18 Options of Chicago v. Kaplan, 514 U.S. 938, 944 (1995). Lee has the burden to establish both 19 procedural and substantive unconscionability. See Pinnacle, 55 Cal. 4th at 247. 20 Under California law, "the doctrine of unconscionability has both a procedural and a 21 substantive element, the former focusing on oppression or surprise due to unequal bargaining 22 power, the latter on overly harsh or one-sided results." Baltazar v. Forever 21, 62 Cal. 4th 123 7, 23 1243 (2016). "[T]he more substantively oppressive the contract term, the less evidence of 24 procedural unconscionability is required to come to the conclusion that the term is unenforceable, 25 and vice versa." !d. at 1244. As shown below, Lee cannot establish either. 26 1. Lee Cannot Establish Procedural Unconscionability. 27 Procedural unconscionability stems from the elements of oppression and unfair surprise. 28 Dotson v. Amgen, 181 Cal. App. 4th 975,980 (2010). Oppression in the context of employment CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 7 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 contracts arises in situations where there is unequal bargaining power and little meaningful 2 choice. !d., 980-81. Surprise involves scenarios where the terms of the bargain are hidden in a 3 long document by a party in a superior bargaining position. Roman v. Super. Ct., 172 Cal. App. 4 4th 1462, 1469 (2009) ("The arbitration provision was not buried in a lengthy employment 5 agreement. Rather it was contained on the last page of a seven-page employment application"). 6 Here, there is no evidence of procedural unconscionability. Lee is a well-educated 7 individual who was employed (as the CEO of her own company and as a Software Engineer) at 8 the time Google offered her a job. (Deer Dec. Ex. B). She thus "falls into the category of 9 'sought-after employees,' who are positioned to reject offers of employment." See Dotson, 181 10 Cal. App. 4th at 981, fn. 2. Lee "was not lied to, placed under duress, or otherwise manipulated 11 into signing the arbitration agreement." Baltazar, 62 Cal. 4th at 1245. She should be bound by 12 the agreement she signed. Anderson v. Savin Corp., 206 Cal. App. 3d 356, 363, fn. 1 (1988) 13 ("when a person with the capacity of reading and understanding an instrument signs it, [she] is, in 14 the absence of fraud and imposition, bound by its contents, and is estopped from saying that its 15 explicit provisions are contrary to [her] intentions and understanding"). 16 To the extent Lee argues that the contract was adhesive, that is not enough to establish 17 procedural unconscionability, as the adhesive aspect of an agreement is not dispositive. Peng v. 18 First Republic Bank, 219 Cal. App. 4th 1462, 1470 (2013) (arbitration agreement was not 19 procedurally unconscionable despite its adhesive nature). Procedural unconscionability is not 20 established simply because a contract term may have been non-negotiable. See Lagatree v. Luce, 21 Forward, 74 Cal. App. 4th 1105, 1122-23 (1999) ("a predispute arbitration agreement is not 22 invalid merely because it is imposed as a condition of employment"); Holmes v. City ofLos 23 Angeles, 117 Cal. App. 3d 212, 217 (1981) ("a determination that a contract is adhesive is merely 24 the beginning and not the end of the analysis insofar as enforceability of its terms is concerned"). 25 Nor was there any surprise. The arbitration provision is clearly and conspicuously 26 labeled, including in the title of the document and in the relevant subsections. (Wilson Dec., Ex. 27 A). It is plainly-worded, with important terms called out in bold, ALL CAPS, and other means of 28 emphasis. (!d.) The arbitration provision is set forth on the last two pages of a six-page CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 8 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 agreement. (Id.) See Roman, 172 Cal. App. 4th at 1469 ("The arbitration provision was not 2 buried in a lengthy employment agreement. Rather, it was contained on the last page of a seven- 3 page employment application ... "). In light of the repeated prominent references to arbitration, 4 including in Lee's offer letter and in the title of the Agreement, there can be no credible argument 5 of any unfair surprise. (Deer Dec. , 3, Ex. C; Wilson Dec. , 3, Ex A). 6 To the extent Lee argues that the Agreement is procedurally unconscionable because it did 7 not attach a copy of the JAMS Rules, that argument has been rejected by the California Supreme 8 Court and various Court of Appeal decisions. See Baltazar, 62 Cal. 4th at 1246; Lane v. Francis 9 Capital, 224 Cal. App. 4th 676, 691 (2014) ("[t]here could be no surprise, as the arbitration rules 10 referenced in the agreement were easily accessible to the parties -the AAA rules are available on 11 the Internet"); Peng, 219 Cal. App. 4th at 1472 ("the failure to attach the AAA rules, standing 12 alone, is insufficient grounds to support a finding of procedural unconscionability"). The JAMS 13 Rules are easily accessible online, see http://www.jamsadr.com/rules-employment-arbitration. In 14 short, Lee has not met her burden to establish procedural unconscionability. To the extent the 15 Court finds any minimal aspects of procedural unconscionability, that means that Lee must make 16 a strong showing of substantive unconscionability. As shown below, Lee cannot meet her 17 burden. 18 2. 19 Lee Cannot Establish That The Agreement Is Substantively Unconscionable. 20 The California Supreme Court has explained that "[s]ubstantive unconscionability pertains 21 to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh 22 or one-sided. A contract term is not substantively unconscionable when it merely gives one side a 23 greater benefit; rather, the term must be so one-sided as to shock the conscience." Pinnacle, 55 24 Cal. 4th at 246 (emphasis added). In analyzing an arbitration agreement, three rules of 25 interpretation control: 26 1. "A contract must receive such an interpretation as will make it lawful, operative, 27 definite, reasonable, and capable of being carried into effect, if it can be done without violating 28 the intention of the parties." Cal. Civ. Code§ 1643. 9 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 2 3 2. "An interpretation which gives effect is preferred to one which makes void." Cal. Civ. Code§ 3541. 3. The "public policy in favor of arbitration as speedy and relatively inexpensive 4 means of dispute resolution" means that, where possible, an arbitration agreement must be 5 interpreted "in a manner that renders it enforceable rather than void." Pearson Dental v. Super. 6 Ct., 48 Cal. 4th 665, 682 (2010). The California Supreme Court has emphasized that: 7 10 The unconscionability inquiry is not a license for courts to impose their renditions of an ideal arbitral scheme. Rather ... the unconscionability inquiry focuses on whether the arbitral scheme imposes costs and risks on a wage claimant that makes the resolution of the wage dispute inaccessible and unaffordable, and thereby effectively blocks every forum for the redress of disputes, including arbitration itself. SonicCalabasas v. Moreno, 57 Cal. 4th 1109, 1148 (2013) 11 In this case, Lee cannot carry her burden of establishing substantive unconscionability. The 12 Agreement is expressly mutual. It provides that Google will pay all costs except for the initial 13 filing fee. (Wilson Dec., Ex. A §15(b))., It therefore provides a forum that is both accessible and 14 affordable. See Sonic-Calabasas, 57 Cal. 4th at 1148. And far from being one-sided, the 15 Agreement is expressly bilateral, in that it applies to "any and all controversies, claims, or 16 disputes ... arising out of, relating to, or resulting from my employment with the company ... I 17 further understand that this agreement to arbitrate also applies to any disputes that the Company 18 may have with me." (Wilson Dec., Ex. A, §15(a)). The Agreement terms do not in any way 19 "shock the conscience." 20 a. 8 9 21 The Provision Regarding SOX Claims Is Not Unconscionable. Lee claims that the agreement to arbitrate claims under the Sarbanes-Oxley Act (SOX) is 22 unenforceable and substantively unconscionable, even though she does not assert a SOX claim. 23 The provision requiring arbitration of SOX claims was lawful and enforceable at the time Ms. 24 Lee accepted the Agreement in December 2008. See, e.g., Taylor v. Fannie Mae, 839 F. Supp. 2d 25 259, 261 (D.D.C. 2012) ("Sarbanes-Oxley claims were arbitrable at the time the law was 26 originally enacted .... "). Arbitration of SOX claims was not prohibited until the enactment of 27 the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. Pub. L. No. 28 111-203, § 922(c), 124 Stat. 1276, 1848 (2010), codified at 18 U.S.C. § 1514A(e)(2); see also CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 10 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 Beard v. Santander, 2012 WL 1292576, at *6 (E.D. Cal. Apr. 16, 2012) (noting that "[p]rovisions 2 of the Dodd-Frank Act amend the whistleblower provisions of the Sarbanes-Oxley Act to make 3 unenforceable any predispute arbitration clause for disputes arising under those whistleblower 4 sections"); Ruhe v. Masimo Corp., 2011 WL 4442790, at *4 (C.D. Cal. Sept. 16, 2011) ("The 5 Dodd-Frank Act's whistleblower amendments to the Securities Exchange Act of 1934 and the 6 Sarbanes-Oxley Act both contain provisions that render pre-dispute arbitration agreements 7 unenforceable for claims brought under these two sections."). In short, the provision that Lee 8 challenges was enforceable at the relevant time, in 2008, when the contract was made. Cal. Civ. 9 Code§ 1670.5(a) ("Ifthe court as a matter of law finds the contract or any clause ofthe contract 10 to have been unconscionable at the time it was made the court may refuse to enforce the 11 contract") (emphasis added); American Software v. Ali, 46 Cal. App. 4th 1386, 1390 (1996) 12 (courts require a showing of "both procedural and substantive unconscionability at the time the 13 contract was made" and "the critical juncture for determining whether a contract is 14 unconscionable is the moment when it is entered into by both parties") (emphasis added). 15 Even if the Court considered substantive unconscionability in the present moment (which 16 it should not do in light of the contract interpretation instruction in Civil Code Section 1670.5(a)), 17 the great weight of authority holds that the amendment prohibiting arbitration of SOX claims 18 should not be applied retroactively to agreements signed before that amendment. Khazin v. TD 19 Ameritrade, 2014 WL 940703, at *8 (D.N.J. March 11, 2014) (holding that Dodd-Frank's 20 amendment barring arbitration was not retroactive, granting motion to compel arbitration where 21 the employee executed the arbitration agreement in 2006); Weller v. HSBC Mortg. Servs., 971 22 F.Supp.2d 1072, 1079 (D. Colo. Sept. 11, 2013) ("the right to insist on arbitration is not just a 23 matter of where the claims may be heard but a question of vested, contractual rights, which may 24 not be retroactively withdrawn absent clear congressional intent to that effect"); Henderson v. 25 Masco Framing, 2011 WL 3022535 (D. Nev. July 22, 2011); Holmes v. Air Liquide, 2012 WL 26 267194 (S.D. Tex. Jan. 30, 2012); Taylor v. Fannie Mae, 839 F.Supp. 2d 259 (D.D.C. March 20, 27 2012); Blackwell v. Bank ofAmerica, 2012 WL 1229673 (D.S.C. Mar. 22, 2012); see also Mejia 28 v. EMC Mortg. Corp., 2012 WL 367364, at *5 fn. 4 (C.D. Cal. Feb. 2, 2012) (holding that CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 11 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 provisions of Dodd-Frank "do not apply retroactively."). In rejecting retroactive application of 2 Dodd-Frank's prohibition on arbitration, these courts have applied the U.S. Supreme Court's 3 presumptive rule that statutes operate only prospectively unless the legislature clearly indicated 4 that it intended retroactive application. Landgrafv. US! Film Prods., 511 U.S. 244, 265 (1994) 5 ("the presumption against retroactive legislation is deeply rooted in our jurisprudence, and 6 embodies a legal doctrine centuries older than our Republic"). The California Supreme Court 7 follows the same presumption against retroactive application of legislation absent clear legislative 8 intent to the contrary. Western Security Bankv. Super. Ct.,15 Cal. 4th 232,243 (1997). 9 10 11 b. The Prevailing Party Attorneys' Fee Provision Is Not Unconscionable Because It Does Not Apply Where Prohibited ByLaw. Lee claims that the prevailing party attorneys' fees provision is unconscionable, but by its 12 own terms, that fee-shifting provision does not apply if "prohibited by law." Google assumes that 13 Lee will attempt to rely on Trivedi v. Curexo Tech., 189 Cal. App. 4th 387 (2010), but that case is 14 easily distinguished. In Trivedi, the agreement provided that if the plaintiff asserted FEHA 15 claims and lost, the employer would automatically recover its attorneys' fees: 16 18 The prevailing party shall be entitled to recover from the other party all costs, expenses and reasonable attorney [] fees incurred in any arbitration arising out of or relating to this Agreement, and in any legal action or administrative proceeding to enforce any arbitration award or relief. 19 Trivedi, 189 Cal. App. 4th at 392. The mandatory fee-shifting provision in Trivedi violated 20 substantive law because it purported to modify FEHA's fee-shifting standard. 17 21 Here, by contrast, the attorneys' fees provision does not apply if"prohibited by law." 22 That provision is lawful on its face, and much more similar to the fee-shifting language that the 23 Northern District recently upheld in Khraibut v. Chahal, 2016 WL 1070662 (N.D. Cal. March 18, 24 20 16). The Khraibut court distinguished Trivedi and held that a fee-shifting provision was not 25 unconscionable, in part because the provision in Khraibut was subject to the agreement's 26 requirement that the arbitrator adhere to California law. The Khraibut court explained: 27 28 CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK [T]he problem in Trivedi was the "mandatory" nature of the fee award clause, in that automatically awarding fees to a potentially prevailing defendant employer would disincentivize a plaintiff from pursuing a 12 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 meritorious claim in the first place. Trivedi, 189 Cal. App. 4th at 394. That is not the case here. Khraibut brings FEHA claims, but the feeshifting provision allows the arbitrator to exercise his discretion and requires him to adhere to California law-which includes FEHA and Armendariz and its progeny. 2 3 4 !d. at *11. The same is true here, as the Agreement provides that "the arbitrator shall administer 5 and conduct any arbitration in accordance with California law, including the California Code of 6 Civil Procedure." (Wilson Dec. Ex. A, §15(b)). The fee-shifting provision should be interpreted 7 as lawful in light of the California Supreme Court's repeated mandate that the strong public 8 policy favoring arbitration requires courts to interpret arbitration agreement terms in a manner 9 that renders them valid instead of void where it is reasonable to do so, as it is here. Pearson 10 Dental v. Super. Ct., 48 Cal. 4th 665, 682 (2010) (where possible, an arbitration agreement must 11 be interpreted "in a manner that renders it enforceable rather than void"). In sum, Lee cannot 12 carry her burden to establish procedural and substantive unconscionability. 13 E. To The Extent Necessary, The Court Can And Should Sever Any Unconscionable Provision In The Agreement. 14 15 Civil Code Section 1670.5(a) provides: "If the court as a matter of law finds the contract 16 or any clause of the contract to have been unconscionable at the time it was made the court may 17 refuse to enforce the contract or it may enforce the remainder of the contract without the 18 unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid 19 any unconscionable result." "[R]efusing to enforce the entire agreement is an option 'only when 20 an agreement is 'permeated' by unconscionability."' Harper v. Ultimo, 113 Cal. App. 4th 1402, 21 1411 (2003), quoting Legis. Com., 9 West's Ann. Civ. Code (1985 ed.) foll. § 1670.5, p. 494; 22 Code Civ. Proc. § 1670.5; see also Bolter v. Super. Ct., 87 Cal. App. 4th 900, 910 (2001) 23 ("It is not necessary to throw the baby out with the bath water, i.e., the unconscionable provisions 24 can be severed and the rest of the agreement enforced."). Many California courts have severed or 25 limited unconscionable provisions in arbitration agreements. See e.g. Serafin v. Balco Properties, 26 235 Cal. App. 4th 165, 183 (2015) (severing mandatory prevailing party attorney's fee provision); 27 Jones v. Humanscale, 130 Cal. App. 4th 401, 416-17 (2005) (directing trial court to excise invalid 28 provision); Little v. Auto Stiegler, 29 Cal. 4th 1064, 1074, 1075-76 (2003) (severing no-appeal CURLEY, HURTGEN & JOHNSRUD LLP COUNSELORS AT LAW MENLO PARK 13 CASE NO. 18CV323651 MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION 1 provision; severance was necessary to "prevent parties from gaining undeserved benefit or 2 suffering undeserved detriment as a result of voiding the entire agreement"). To the extent that 3 Lee carries her burden of establishing any unconscionable term, which she cannot do for the 4 reasons set forth above, severance is appropriate, as the Agreement cannot be fairly characterized 5 as being "permeated with unconscionability." 6 F. 7 An order compelling claims to arbitration results in a mandatory stay of those claims in The Court Should Dismiss Or Stay This Litigation Pending Arbitration. 8 Court. Code Civ. Proc. § 1281.4 ("[i]fa Court ... has ordered arbitration of a controversy ... the 9 court in which such action or proceeding is pending shall, upon motion of a party, stay the action 10 or proceeding .... "). Courts have discretion under 9 U.S.C. § 3 to dismiss claims that are subject 11 to arbitration. Thinket Inkv. Sun Microsystems, 368 F.3d 1053, 1060 (9th Cir. 2004) 12 (upholding dismissal \\rithout leave to amend where all claims were subject to arbitration). All of 13 Lee's claims are subject to arbitration, so the Court should dismiss or stay this entire action 14 pending arbitration. 15 IV. 16 CONCLUSION Lee and Google agreed to arbitrate any claims arising from her employment. Lee has not 17 honored the Agreement, and she cannot carry her burden to invalidate the Agreement. 18 Accordingly, Google respectfully requests that the Court enter an Order compelling Lee to 19 arbitrate her claims through JAMS and dismiss or stay this action pending arbitration. 20 Dated: March 23,2018 21 22 23 CURLEY, HURTGEN & JOHNSRUD LLP By~ BANLJOSRUD Attorneys for Defendant GOOGLEINC. 24 25 26 27 28 CURLEY, HURTGEN & JOHNSRUD LLP 14 COUNSELORS AT LAW MEMORANDUM OF POINTS AND AUTHORITIES ISO PETITION TO COMPEL ARBITRATION MENLO PARK CASE NO. 18CV323651