Ortega v. UnitedHealth Group, Inc.

Background

Theresa Ortega and Gabriela Rocha sued UnitedHealth Group, Inc. (UHG), Optum Services, Inc. (OSI), and Optum Car, Inc. (OCI). The plaintiffs were former employees who worked at the defendants’ California locations. They alleged that the defendants did not provide the required 60 days’ notice or pay in lieu of notice before a mass layoff in August 2023. The complaint asserted nine claims, including claims under the federal Worker Adjustment and Retraining Notification Act, the California WARN Act, several California wage statutes, California’s Unfair Competition Law, and the Private Attorneys General Act (PAGA).

When they began working, each plaintiff received an offer letter and electronically signed an arbitration agreement. The agreements stated that employment-related legal disputes covered by the policy would be resolved through final and binding arbitration rather than in court. They also stated that disputes about the policy’s interpretation, enforceability, applicability, unconscionability, arbitrability, or formation were covered, subject to specified exclusions.

Delegation of Arbitrability

The court incorporated the offer letters and arbitration agreements into its consideration of the motion because the plaintiffs’ claims depended on those documents and the plaintiffs did not dispute their authenticity or existence.

The plaintiffs did not dispute that they signed the agreements but argued that the delegation clause was not clear and unmistakable. They pointed to provisions that, in their view, left some questions about enforceability and arbitrability for the court rather than the arbitrator. The defendants argued that the agreement delegated all gateway questions to the arbitrator except questions concerning the class-action and PAGA waivers.

The court agreed with the defendants. It held that the agreement clearly and unmistakably delegated gateway questions about the arbitrability of the plaintiffs’ claims to an arbitrator. Because the plaintiffs did not make arguments specifically challenging the delegation provision itself, the court declined to consider whether that provision was unconscionable.

Unconscionability of the Arbitration Agreement

The plaintiffs argued that the arbitration agreement was substantively unconscionable, meaning that its terms were unfairly one-sided. They identified four concerns: possible responsibility for witness expenses, limits on discovery, confidentiality requirements, and the PAGA waiver.

The court rejected each argument. It found that the possible witness expenses were not enough, at that stage, to make the agreement substantively unconscionable. It also found the discovery limits adequate because the agreement allowed each side one interrogatory identifying witnesses, 25 document requests, and up to two eight-hour days of depositions, while permitting additional discovery by agreement or order of the arbitrator.

The court held that the confidentiality provision did not make the agreement substantively unconscionable. It also held that requiring arbitration of the plaintiffs’ individual PAGA claims was not substantively unconscionable. The court therefore did not need to address the plaintiffs’ arguments about procedural unconscionability, which concerns the circumstances under which a contract was made.

Class and PAGA Claims

The defendants asked the court to dismiss or strike the class claims because the plaintiffs had agreed to a class-action waiver. The court granted that request and dismissed the plaintiffs’ class claims.

The court treated the individual and non-individual parts of the PAGA claims separately. It held that the plaintiffs’ individual PAGA claims must go to arbitration. It also held that the non-individual PAGA claims could remain in court, but that those claims should be stayed while the individual claims were arbitrated.

Disposition

Judge Jon S. Tigar granted the defendants’ motion to compel arbitration. The court sent the plaintiffs’ individual claims to arbitration, dismissed the class claims, and stayed the remaining proceedings pending arbitration. The order states that it is not a dismissal or disposition of the action against any party. The parties were ordered to notify the court jointly within seven days after arbitration concluded and request that the court reopen the matter or take other action consistent with the arbitration’s resolution.