Bonetti v. TriStruX LLC

Background

Tyler Andrew Bonetti filed a proposed class action against TriStruX LLC, supervisor James Cortez, and John Kelly, the head of West Coast operations. He alleged nine claims under California wage-and-hour laws and California’s Unfair Competition Law (UCL). The allegations included failure to pay minimum and overtime wages, failure to provide meal and rest periods, unpaid time spent on pre-shift and post-shift tasks, wage-statement violations, and penalties for late payment and termination wages.

The defendants removed the case from state court under the Class Action Fairness Act (CAFA). CAFA gives federal courts jurisdiction over qualifying class actions when, among other requirements, the amount in controversy exceeds $5 million, the proposed class has at least 100 members, and minimal diversity exists. TriStruX submitted calculations estimating potential damages between $5,421,982.71 and $6,738,455.20, and total potential exposure including attorney’s fees between $6,506,379.25 and $8,423,069.00.

Bonetti moved to remand, arguing that TriStruX’s damages calculations were speculative and lacked support. TriStruX moved to compel arbitration based on an agreement Bonetti electronically signed on September 8, 2023. The agreement covered disputes involving TriStruX and its employees, including disputes under the California Labor Code, wage orders, state and local law, and public policy.

Motion to Remand

The court denied the motion to remand. It held that TriStruX supported its calculations with declarations from Cathy Potter, TriStruX’s Vice President of Human Capital, who reviewed payroll and employee records. The court found that the underlying data and TriStruX’s assumptions were reasonable, including assumptions about the frequency of overtime, minimum-wage, meal-period, rest-period, wage-statement, and waiting-time violations.

The court concluded that even TriStruX’s most conservative estimate placed more than $6 million in controversy. It therefore held that the CAFA amount-in-controversy requirement was met and that the federal court had jurisdiction.

The court separately dismissed the UCL claim without prejudice to refiling it in state court. The opinion states that this resulted from the lack of equitable jurisdiction over that claim.

Motion to Compel Arbitration

The court granted the motion to compel arbitration. Under the Federal Arbitration Act, arbitration agreements generally must be enforced according to their terms, subject to generally applicable contract defenses such as unconscionability. Under California law, the party opposing arbitration must show both procedural and substantive unconscionability. Procedural unconscionability concerns oppression or surprise in how the agreement was formed; substantive unconscionability concerns overly harsh or one-sided terms.

The court rejected Bonetti’s argument that the agreement was ineffective because TriStruX did not sign it. It held that Bonetti expressly accepted the employment contract during onboarding and that the employer’s offer and requirement of acceptance showed assent.

The court also rejected the challenges to the agreement’s terms. It applied California law rather than New Jersey law because the defendants did not argue that New Jersey law governed. It found that the fee provision did not require an award of attorney’s fees and severed the provision to avoid any issue. The court found that Bonetti’s maximum arbitration-fee exposure was $300 and was not unconscionable, that the confidentiality provision did not prevent disclosure of wage information, and that the discovery limits were not unconscionable because the agreement allowed discovery and gave the arbitrator authority to permit more.

The court also rejected the procedural-unconscionability arguments. Bonetti could revoke the agreement within seven calendar days after signing it, and the agreement’s incorporation of the American Arbitration Association employment rules did not make it procedurally unconscionable.

The court compelled arbitration of all claims except the UCL claim. The order was without prejudice to Bonetti’s asserting a representative claim under the Private Attorneys General Act (PAGA). The court explained that arbitration of an individual PAGA claim does not necessarily eliminate the plaintiff’s ability to pursue non-individual PAGA claims in court. The non-individual PAGA claims were to remain stayed pending arbitration.

Disposition

The court denied the motion to remand, granted the motion to compel arbitration without prejudice to the plaintiff’s asserting a representative PAGA claim, dismissed the UCL claim without prejudice to refiling it in state court, and stayed the case until arbitration is complete. Judge Laurel Beeler signed the order on June 27, 2024.