Chang v. Zima International, Inc.

Background

Carter Chang alleged that he formerly worked for Zima International, Inc. as “Head of Operations Strategy & Vertical Integration.” He claimed that a written contract titled “Performance Equity Grant” entitled him to receive 50,000 Class A common shares of Zima stock, but that Zima did not issue the shares. Chang asserted seven causes of action under state law.

Zima moved under the Federal Arbitration Act to compel arbitration and stay the court case. Chang filed a “Conditional Non-Opposition.”

Arbitration Agreement

Zima relied on a “Mutual Dispute Resolution Agreement.” The agreement stated that disputes relating to an employee’s employment or association with the company—including breach-of-contract claims—would be decided exclusively through binding arbitration rather than by a judge or jury. It also allowed an employee to opt out by email within 30 days after receiving the agreement. The agreement stated that failing to opt out and continuing employment would constitute acceptance.

The agreement was electronically signed by two Zima representatives but not by Chang. Zima presented undisputed evidence that it emailed the agreement to Chang on September 26, 2023, that Chang opened the email that day, that he did not opt out within the specified period, and that he continued working for Zima until February 29, 2024.

Court’s Analysis

The court explained that the party seeking arbitration must prove, under ordinary state contract-law principles, that an agreement to arbitrate exists. The court found that Chang accepted the agreement through his conduct because he did not timely opt out and continued working for Zima.

The court also addressed who should decide whether the claims are arbitrable. Although courts ordinarily decide that preliminary question, parties may assign it to an arbitrator if their agreement clearly and unmistakably does so. The agreement gave the arbitrator exclusive authority to resolve disputes about the arbitrability of individual claims. The court found that language sufficient to assign those preliminary questions to the arbitrator.

Ruling

The court granted Zima’s motion to compel arbitration. It stayed the action pending completion of arbitration and vacated the hearing scheduled for July 19, 2024. The court also denied Chang’s implicit request to impose conditions on arbitration, noting that each requested condition appeared to be included in the agreement.